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Court of Appeal, First District, Division 1, California.

William WAITS et al., Plaintiffs and Respondents, v. Robert B. CARLESON, Director of the State Department of Social Welfare, et al., Defendants and Appellants.

Civ. 31694, 32003.

Decided: March 19, 1973

Evelle J. Younger, Atty. Gen., Elizabeth Palmer, Asst. Atty. Gen., David J. Bowie, Deputy Atty. Gen., San Francisco, for appellants. Clifford Sweet, William R. Petrocelli, Denis Clifford, Marjorie Gelb, Legal Aid Society of Alameda County, Oakland, for respondents. Charles C. Marson, Joseph Remcho, American Civil Liberties Union Foundation of Northern California, Inc., San Francisco, Karlton, Blease & Vanderlaan, Coleman A. Blease, Sacramento, amicus curiae.

The appellants are state and county welfare agencies and officials. They have appealed from orders of the Alameda County Superior Court, which, among other things, declare three regulations of appellant State Department of Social Welfare (sometimes hereafter the ‘Department’) to be invalid. The regulations purport to implement California's ‘Burton-Miller Act’ (Welf. & Inst.Code, §§ 11200–11507, inclusive), relating to ‘Aid to Families with Dependent Children.’ Respondents are dependent children and others acting on their behalf who were successful plaintiffs in the superior court action for an injunction.

California, through the Burton-Miller Act, participates in a federal program entitled ‘Aid to Families with Dependent Children,’ embraced by subchapter IV of chapter 7 of the Social Security Act (42 U.S.C.A. §§ 601–610), which latter statute will hereinafter be referred to as the ‘Social Security Act.’ The comprehensive program is commonly called ‘AFDC.’ While it is funded in part by federal grants, it is administered by the state through its Department of Social Welfare. (See Welf. & Inst.Code,§ 11209; King v. Smith, 392 U.S. 309, 316, 88 S.Ct. 2128, 20 L.Ed.2d 1118.)

In its administration of the AFDC program California is, of course, bound by the Social Security Act and such valid regulations as the Secretary of Health, Education and Welfare may promulgate thereunder. (See Carleson v. Remillard, 406 U.S. 598, 601, 92 S.Ct. 1932, 32 L.Ed.2d 352; King v. Smith, supra, 392 U.S. 309, 316–317, 333, fn. 34, 88 S.Ct. 2128; Ramos v. Montgomery, D.C., 313 F.Supp. 1179, 1181, affd. 400 U.S. 1003, 91 S.Ct. 572, 27 L.Ed.2d 618; 42 U.S.C.A., § 1302.)

The Social Security Act (42 U.S.C.A. § 601) states that it is enacted for ‘the purpose of encuraging the care of dependent children in their own homes or in the hones of relatives . . ..’ (Emphasis added.) The California statute expresses a similar objective stating, ‘It is the object and purpose of this chapter . . . to provide the best substitute for their own homes for those children who must be given foster care.’ (Welf. & Inst.Code, § 11205.)

The Social Security Act also provides that the state shall, in determining needs of dependent children ‘take into consideration any . . . income and resources of [the] child . . ..’ (Emphasis added; 42 U.S.C.A. § 602, subd. (a)(7).)

The equal protection clause of the Constitution demands that any distinction made by a state in the amount of welfare benefits for dependent shall bear some reasonable relation to their needs. (Williams v. Field, 9 Cir., 416 F.2d 483, 486, cert. den., 397 U.S. 1016, 90 S.Ct. 1252, 25 L.Ed.2d 431; Anderson v. Burson, D.C., 300 F.Supp. 401, 404; Vincent v. State of California, 22 Cal.App.3d 566, 572, 99 Cal.Rptr. 410.)

The respondent dependent children are of a class who are deprived of parental support and who live with relatives (usually aunts, uncles or grandparents) who are not themselves needy, and who are under no legal duty to support the children.

The State Department of Social Welfare by its AFDC Regulation 44–212.2 has fixed the ‘minimum basic standard of adequate care’ of such dependent children as follows:

One of the Department's regulations found invalid by the court is AFDC Regulation 44–115.611, which reads as follows:

‘The excess of the in-kind income value for housing and utilities (see .9 below) included in the minimum basic standard of adequate care figure . . . for the appropriate size Family Budget Unit over the increased cost of housing and utilities to the nonneedy relative caused by the presence of the AFDC child(ren) in his household shall be considered a contribution in-kind to the Family Budget Unit.’

This regulation is interpreted by the Department as providing:

1. To the extent that housing and utilities furnished dependent children are not attended by increased costs to their nonneedy relatives, they shall be considered as gifts to, and therefore resources of, the dependent children. The relatives are not to be compensated for the value, as distinguished from increased cost, of such housing and utilities.

2. As to increased costs of the housing and utilities a presumption attaches that there were none. This presumption may be rebutted by relatives who are allowed to ‘demonstrate that they have incurred increased housing and utilities costs because of the children's presence.’ Such demonstrated increased costs will not be considered resources of the children and the relatives will be compensated therefor.

The above Regulation 44–115.611 has been given a stricter interpretation by respondent Alameda County Welfare Department. That agency has advised relatives caring for respondent dependent children that ‘House and utilities are no longer allowed on nonneedy caretaker cases,’ and that in such cases ‘state law’ requires that ‘free rent and utilities [are] mandatory.’

The Department's Regulations 44–115.91 and 44–115.92 evaluate the presumed resources, or ‘contributions in kind,’ as follows:

These regulations are the remaining two found to be invalid by the superior court.

The broad issue before us is whether the questioned regulations are contrary to the stated purposes of the Social Security Act. The problem is a perplexing one, but contrary to the insistence of respondents we find no fault in the motives of appellants. The disputed regulations are an obvious attempt to control the ever increasing burden of welfare costs of the state.

By the Social Security Act's definition, a “dependent child' means a needy child who has been deprived of parental support' for any of several stated reasons. It includes such a child living in a home ‘maintained by one or more [nonneedy] relatives as his or their own home.’ (42 U.S.C.A. § 606.) The statute provides that the nonneedy relatives may apply for AFDC aid for dependent children living in their homes. But, as we have indicated, in determining the amount of the children's need the state agency shall ‘take into consideration any . . . income and resources of [the] child.’

A threshold question arises whether partial support, voluntarily and in fact being furnished a dependent child, by one under no legal obligation so to do, may be considered a ‘resource’ of the child, thus permitting a lesser amount of aid.

This question has frequently been considered. Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, L.Ed.2d 561, has held that under the Social Security Act's AFDC program, support actually furnished by a man without legal obligation to do so, who is living with a dependent child and its mother, may be considered a resource of the child by the state. In King v. Smith, supra, 392 U.S. 309, 319 –320, 88 S.Ct. 2128, supra, 392 U.S. 309, 319–320, 88 S.Ct. 2128, 2134, the same court earlier reached a similar conclusion, stating: ‘[T]here is no question that regular and actual contributions to a needy child, including contributions from the kind of person Alabama calls a substitute father, can be taken into account in determining whether the child is needy. In other words, if by reason of such a man's contribution, the child is not in financial need, the child would be ineligible for AFDC assistance . . ..’ (See also People v. Lockett, 25 Cal.App.3d 433, 440–441, 102 Cal.Rptr. 41.) In Solman v. Shapiro, D.C., 300 F.Supp. 409, 415, affd. 396 U.S. 5, 90 S.Ct. 25, 24 L.Ed.2d 5, it was said: ‘With respect to children who are beneficiaries of AFDC payments, the income of a stepparent cannot be assumed to be available to his stepchildren living in the same home with him. The stepfather is neither a ‘relative claiming aid’ nor an essential person. His income or his resources may be taken into consideration only if they are actually available for the use of the children. . . .' In County of San Diego v. Montgomery, 23 Cal.App.3d 174, 99 Cal.Rptr. 921, the court, relying on King v. Smith, supra, 392 U.S. 309, 88 S.Ct. 2128, held that support voluntarily and actually furnished by an organization known as ‘Synanon,’ was good cause for denying AFDC payments for an otherwise dependent child. And in People v. Shirley, 55 Cal.2d 521, 525, 11 Cal.Rptr. 537, 539, 360 P.2d 33, 35, in the context of welfare relief for needy children, the court stated, ‘If children are not in need, they are obviously not eligible for assistance regardless of who is paying for their support. . . .’ (See also County of Kern v. Coley, 229 Cal.App.2d 172, 180, 40 Cal.Rptr. 53.)

The foregoing authority makes it abundantly clear that generally support, voluntarily and actually furnished a dependent child by one under no obligation to do so, may be considered a ‘resource’ of the child under the AFDC provisions of the Social Security Act.

It remains to be seen whether the same intent is manifested by Congress in respect of support of dependent children by nonneedy relatives in their homes.

It is obvious that a relative who takes and supports dependent children in his home does so ‘voluntarily’ in an accepted sense of the word, for he is not legally required to do so. (See Touli v. Santa Cruz County Title Co., 20 Cal.App.2d 495, 497, 67 P.2d 404.) Just as obviously he will often do so under compulsion of a sense of family affection, or duty, or pride. In such a case it may be said because of such compulsion not to be truly voluntary. (See Engelken v. Justice Court, 50 Cal.App. 157, 159, 195 P. 265; 92 C.J.S. Voluntary, p. 1029.) Always unless he be reimbursed, he will be placed at some economic disadvantage.

As we have pointed out, Congress has stated the fundamental purpose of the AFDC provisions of the Social Security Act to be that of ‘encouraging the care of dependent children in their own homes or in the homes of relatives . . ..’ (Emphasis added; 42 U.S.C.A., § 601.)

We can conceive of nothing better calculated to discourage relatives from bringing dependent children into their homes than to deny compensation for their support.

Respondents, at least respondent Department, seem to recognize that the Social Security Act requires payment of the costs of such support, for indicated, the disputed regulations contemplate that the relatives be paid such ‘increased costs' as are actually ‘demonstrated’ by them.

The immediate question relates more to whether nonneedy relatives are to be compensated for the obvious ‘value’ of the support furnished dependent children, where there is no readily discernible increased cost of such support. Obvious illustrations occur where the child is assigned to an otherwise unused room, or where its contribution to fluctuating utilities bills is difficult of measurement. In such cases the Department's regulations place the minimum ‘value’ of the housing and utilities furnished a dependent child at $67, but their costs to the relatives at nil, unless they can affirmatively, ‘demonstrate increased costs.’

We conclude that the distinction made by respondents is unreasonable, and therefore unacceptable under the Social Security Act. Our reasons follow.

It seems clear that the Social Security Act's purpose of encouraging the care of dependent children in the homes of relatives would be largely frustrated if upon accepting such children the relatives are required by the act to suffer any substantial economic disadvantage.

When relatives place dependent children in unused rooms of their home they are generally committed to so continue throughout the children's minority. The relatives would ordinarily be restrained from moving into smaller and cheaper quarters, even though it would be financially feasible to do so. The children's space could not be rented out, thus preventing augmentation of the family income. The home, if owned by the relatives and much too large for them alone, could not conveniently be sold, for with the proceeds they must acquire other accommodations of similar size. With children in the home, wear and tear and depreciation must reasonably be expected to proceed at an accelerated pace. The incidence of necessary repairs would obviously be greater. And even though the degree might be difficult of measurement, the usage and therefore costs of water, electricity, telephone service, and the like would certainly be increased.

The point is illustrated by uncontradicted evidence presented to the superior court in the instant case. When three of respondent children came to live with their nonneedy grandparents the latter were required to rent a larger house. Later three of respondent great-grandchildren came into the home requiring rental of a still larger house. The utilities bills became ‘greatly inflated by the children's presence.’ When three other respondent children came to live with their nonneedy relatives the latter had to move into a larger house at a higher rental. The remaining respondent child was living with nonneedy grandparents who were themselves supported by unemployment insurance. The child occupied a room which the grandparents would otherwise rent out to augment their income.

A denial of compensation to nonneedy relatives, for the value of housing and utilities furnished dependent children, is also calculated to cause such substantial economic disadvantage as is contrary to the express purpose of the Social Security Act.

The value of such housing and utilities may be uniformly determined by regulations of the Department such as those numbered 44–115.91 and 44–115.92. And, of course, nonneedy relatives may decline such compensation, thus making their contributions of housing and utilities truly voluntary, and ‘resources' of the dependent children.

We are unpersuaded that our holding in any way affects yet another AFDC Regulation numbered 44–115.8. This regulation purports to eliminate duplicatory payments for housing and utilities where persons of the same household enjoy AFDC payments and assistance under another of the welfare programs of the Social Security Act, i. e., ‘Old-Age Assistance’ (42 U.S.C.A. § 301 et seq.); ‘Aid to the Blind’ (42 U.S.C.A. § 1201 et seq.); ‘Aid for the Permanently and Totally Disabled’ (42 U.S.C.A. § 1351 et seq.). The fault which we find with the here questioned regulations is absent in Regulation 44–115.8, which may not reasonably be deemed to discourage nonneedy relatives from accepting dependent children into their homes.

The remaining question is whether the Social Security Act permits the rebuttable presumption of AFDC Regulation 44–115.611—that housing and utilities are furnished dependent children without increased cost to the relatives.

An early California authority, Judson v. Giant Powder Co., 107 Cal. 549, 556, 40 P. 1020, 1021, tells us: ‘The future is measured and weighed by the past, and presumptions are created from the experience of the past. What has happened in the past, under the same conditions will probably happen in the future, and ordinary and probable results will be presumed to take place until the contrary is shown.’

More recently the United States Supreme Court, speaking in a constitutional context, has held that a presumption ‘must be regarded as ‘irrational’ or ‘arbitrary,’ and hence unconstitutional, unless it can at least be said with substantial assurance that the presumed fact is more likely than not to flow from the proved fact on which it is made to depend. . . .' (Leary v. United States, 395 U.S. 6, 36, 89 S.Ct. 1532 1548, 23 L.Ed.2d 57; see also Tot v. United States, 319 U.S. 463, 468, 63 S.Ct. 1241, 87 L.Ed. 1519.)

And our state's Supreme Court in People v. Stevenson, 58 Cal.2d 794, 797, 26 Cal.Rptr. 297, 298, 376 P.2d 297, 298, states: ‘The rule is settled that a presumption of one fact from evidence of another is violative of due process if there is no rational connection between the fact proved and the fact presumed. . . .’

Common experience, as we have heretofore pointed out, tells us that it is much more likely than not that increased housing and utilities costs occur when additional people are brought into one's home.

We hold, under the authority we have cited, that the rebuttable presumption of AFDC Regulations 44–115.611, 44–115.91 and 44–115.92, that housing and utilities are furnished without cost by nonneedy relatives to dependent children may not stand.

It appears that the subject regulations are not wholly invalid, as declared by the superior court.

The superior court will modify the orders here under appeal to provide that AFDC Regulations 44–115.611, 44–115.91 and 44–115.92 are invalid insofar as they (1) purport to deny nonneedy relatives the reasonable value or cost of housing and utilities furnished dependent children, and (2) purport to create a rebuttable presumption that such housing and utilities are furnished without increased cost to the nonneedy relative. As so modified the orders are affirmed. The parties will bear their respective costs of appeal.

ELKINGTON, Associate Justice.

MOLINARI, P. J., and SIMS, J., concur.

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