dissenting:
The majority today completely disregards the substantial evidence standard of review enunciated by the Supreme Court in Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971), and reviews this case de novo. The majority mistakenly assumes that, because the facts are undisputed, “this is a legal issue.” The AU’s decision, however, does not rest on an erroneous understanding of the applicable California law.
In this case, the resolution of this issue “requires an inquiry that is ‘essentially factual.’ ” See United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.1984) (en banc), petition for cert, filed, 52 U.S.L.W. 3875 (U.S. May 17, 1984) (No. 83-1884). Although the facts may be stipulated here, the inferences properly drawn from them are not. See American Fidelity & Casualty Co. v. London & Edinburgh Insurance Co., 354 F.2d 214, 216 (4th Cir.1965). The inferences must be drawn from the words and conduct of Cyrus, Mingo and Todd over a period of many years. The factfinder, the AU, is in a much better position than we to make such inferences. As the Fourth Circuit Court of Appeals in Charbonnages De France v. Smith, 597 F.2d 406 (4th Cir.1979), has noted:
[Disputes about whether a contract has or has not been formed as the result of words and conduct over a period of time are quintessentially disputes about “states of mind,” since they involve not only the subjective intentions had by the several parties but what “states ■ of mind,” what understandings, their manifestations of intention may have induced in others. These subjective states and objective manifestations of intention present interpretative issues traditionally understood to be for the trier of fact.
Id. at 414-15. The majority’s application of a de novo standard of review is inappropriate because it requires this court to make inferences properly reserved for the fact-finder, the AU.
California appellate courts have recognized the inappropriateness of de novo review and applied the substantial evidence standard of review in equitable adoption cases similar to this one. In In Re Rivolo’s Estate, 194 Cal.App.2d 773, 15 Cal.Rptr. *541268, 269-71 (1961), the appeal was also on a settled statement of facts. The appellate court affirmed the lower court’s finding of an equitable adoption contract and held that the trial court properly submitted the issue to the jury. The appellate court noted that “the findings of the trier of fact cannot be disturbed on appeal if there is any evidence in the record to sustain them or any reasonable inference to be drawn therefrom to sustain them.” See also Estate of Wilson, 11 Cal.App.3d 242, 249, 168 Cal.Rptr. 533, 537 (1980).
“Our sole inquiry is whether the record, read as a whole, yields such evidence as would allow a reasonable mind to accept the conclusions reached by the law judge.” Sample v. Schweiker, 694 F.2d 639, 642 (9th Cir.1982). Here, the evidence would allow a reasonable mind to accept the ALJ’s conclusions. Mingo never assumed Cyrus’ surname. Cyrus did not acknowledge Mingo as his child on a social security application. The record also indicates that Cyrus and Todd merely discussed the possibility of adopting Mingo but “nothing materialized” and they “never did get to it.” Moreover, they last discussed the possibility of adoption many years ago in 1964 or 1965. That no further discussions took place between 1965 and 1978 could indicate that Cyrus did not consider adopting Mingo during this time period. A reasonable mind could have interpreted this evidence as proof that the appellant had not established, as required under California law, an equitable adoption contract “by clear, cogent and convincing evidence.” See Estate of Bauer, 111 Cal.App.3d 554, 561, 168 Cal.Rptr. 743, 746 (1980).
I do not conclude that the majority’s interpretation of the evidence, as it appears to us on the record, is unreasonable. But, “[wjhere evidence is susceptible of more than one rational interpretation, it is the AU’s conclusion which must be upheld.” Sample v. Schweiker, 694 F.2d at 642. To apply de novo review to this case seriously oversteps the proper role of this court.