Amicus Curiae Brief — Calero-Toledo v. Pearson Yacht Leasing Co.

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SUPREME COURT, U, & JAN. 4 1974

No. 73-157 } RICHAEL ROBAX, J9_¢4 Fi

Gu the Supreme Court of the Wnited States

Octroper TERM, 1973

AstoL. CaLEro-ToLeDo, SUPERINTENDENT OF POLICE,

ET AL., APPELLANTS

Vv.

Pearson Yacut Leastna CoMPaNy

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE DISTRICT OF PUERTO RICO

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

ROBERT H. BORE,

Solicitor General,

HENRY E. PETERSEN,

Assistant Attorney General;

ANDREW L. FREY,

Deputy Solicitor Generai,

GERALD P. NORTON,

Assistant to the Solicitor General,

JEROME M. FEIT,

JOSEPH S. DAVIES, JR.,

Attorneys,

Department of Justice,

Washington, D.C. 20530. _

INDEX

Page

Questions presented __-____..--.--------------- 1

Interest of the United States___.._._----------- 2

RINNE ina eet es 3

Introduction and summary of argument_-_-_- ------ 6

Argument:

I. Due process does not require an adversary

hearing prior to seizure of property

subject to forfeiture for having been

used in the commission of an unlawful

act:

A. The procedural setting of seizures

of forfeitable property--------- 12

1. Initial authorization of

a 12

2. Necessity for judicial pro-

ceedings. _____-------- 14

3. Duration of forfeiture pro-

ceedings. _....-.------ 14

4, Possession of property

pending final decision___ 14

B. The district court misapplied

Fuentes v. Shevin__.---------- 15

1. Seizures of forfeitable prop-

erty are not covered by

the rationale of Fuentes. 15

2. Seizures of forfeitable prop-

erty are within the ex-

ception recognized in

Fuentes for evidentiary

529-604—-74_1

C. The district court’s decision is in-

consistent with this Court’s de-

cision in Thirty-Seven Photo-

graphs sustaining seizure in ad-

vance of judicial proceedings__

D. Pearson, as lessor or conditional

vendor, lacks standing to

challenge the validity of the

seizure itself________________-

II. Forfeiture of a vehicle or vessel used for

unlawful purposes by a lessee does not

deprive an “innocent”’ owner of property

without due process or result in a taking

without just compensation:

A. The varied substantive provisions

of forfeiture statutes_________-

/8. This Court has frequently upheld

the constitutionality of statutes

providing for forfeiture of prop-

erty notwithstanding the “in-

nocence” of the owner of the

168) 0. he

C. This Court’s decision in Coin &

Currency did not overrule any

prior decisions upholding the

validity of forfeiture statutes__

D. Forfeiture statutes imposing strict

liability upon property owners

are still a valid means to achieve

important governmental ends_ -

E. In view of the provisions of the

lease, Pearson lacks standing to

claim that the forfeiture de-

prived it of property without

due process or just compensa-

Page

III

Page

Conclusion. -_---.--------------- 2-2 ee. 40

FAN) (11 |) a a ec ee ee 41

CITATIONS

Cases:

Almeida-Sanchez v. United States, No. 71-6278,

decided June 21, 1973___._______________. 18

Anderson Nat'l Bank vy. Luckett, 321 U.S. 233__ 16

Arroyo v. Puerto Rico Transp. Auth’y, 164 F.

AS Se ee ee ' §

Balzac v. Porto Rico, 258 U.S. 298____________ 5

Boddie v. Connecticut, 401 U.S. 371___________ 18

Burge v. United States, 342 F. 2d 408 certiorari

denied, 382 U.S. 829______.______________ 13

Cady v. Dombrowski, No. 72-586, decided

June 21, 1973____----_-_---- 22 eee 21

Cafeteria Workers v. McElroy, 367 U.S. 886___ 16

Carroll v. United States, 267 U.S. 132_________ 18, 23

Chambers v. Maroney, 399 U.S.42___________ 21

Citizens to Preserve Overton Park, Inc. v. Volpe,

ot) a OA |) 37

Coffin Bros. & Co. v. Bennett, 277 U.S. 29__ __ 16

Cooper v. California, 386 U.S. 58.___________ 21

Cotonificio Bustese, S.A. v. Morgenthau, 121

| 2 ae a 37

Dobbins’ Distillery v. United States, 96 U.S.

DOU xa ee ome peewee eee 18, 27, 31

Ewing v. Mytinger & Casselberry, Inc., 339

VB OPeceeeeeeeteess Seer seen cue 16

Exner v. Sherman Power Constr. Co., 54 F. 2d

| | Se ere ee ee 32

Fahey v. Mallonee, 332 U.S. 245_____-_ 16

Fornaris v. Ridge Tool Co., 400 U.S. 41____ ___ 5

Fuentes v. Shevin, 407 U.S. 67__ 4, 9, 15, 17, 18, 20, 21

Goldberg v. Kelly, 397 U.S. 254_ =, «16

Cases—Continued

Hamilton v. Kentucky Distillerves & Warehouse

Page

CO; 201 RG ooo ese eee 33

Harmony v. United States (Brig Malek Adhel),

DUOWs BO ee 31

Helvering v. Mitchell, 303 U.S. 391_-___--__- 8

Henderson’s Distilled Spirits, 14 Wall. 44____- 27

Jaekel v. United States, 304 F. Supp. 993_____ 38

J. W. Goldsmith, Jr.-Grant Co. v. United States,

COR US. UG 31, 32-33, 34

McGowan v. Maryland, 366 U.S. 420_______- 26

McKeehan v. United States, 438 F. 2d 739____ 32

Melendez v. Shuliz, Civ. No. 72-3230-F,

(D. Mass.), decided March 30, 1973, appeal

dismissed, No. 73-1173 (C.A. 1), decided

November 5, 1973_-_----------------_-- 21

Menkarell v. Bureau of Narcotics, 463 F. 2d 88_ 38

Morrissey v. Brewer, 408 U.S. 471___..______ 16

New York Cent. R.R. v. White, 243 U.S. 188_- 32

North Am. Cold Storage Co. v. City of Chicago,

DU U.S. DUG nc oe indtceewdncccns 16

One Lot Emerald Cut Stones v. United States,

409 U.S. 232__-_---------------- 8, 13, 18, 26, 35

One 1958 Plymouth Sedan v. Pennsylvania, 380

OOD nee ee eweceees 26

Ownbey v. Morgan, 256 U.S. 94_________-__- 16

Peisch v. Ware (The Palmyra), 4 Cranch 347- 27

Phillips v. Commissioner of Internal Revenue,

Ce a ce 16, 17

Sniadach v. Family Finance Corp., 395 U.S.

OT a eh ee ee eee 17

Sarkisian v. United States, 472 F. 2d 468,

certiorari denied, No. 73-252, October 23,

Cases—Continued _—

Thacher’s Distilled Spirits, 103 U.S. 679_____- 27

Trupiano v. United States, 334 U.S. 699____- 26

United States v. Edwards, 368 I’. 2d 722___ _- 37

United States v. Jeffers, 342 U.S. 48________- 26

United States v. Kordel, 397 U.S. 1____-_- oe 23

United States v. Morris, 10 Wheat. 246_ ____- 30-31

United States v. One Ford Coupe, 272 US.

$21______--- eee 31, 34

United States v. One 1936 Ford Coach, 307 U.S.

| | a ce ne oe a ene 31, 34, 37

United States v. One 1941 Pontiac Sedan, 83 F.

1), | ee ee 40

United States v. One 1967 Ford Mustang, 457 F.

2d 931, certiorari denied sub nom. Bank of

Am. Natl Trust & Sav. Ass’n v. United

States, 409 U.S. 850___.--.-.------------ 32, 37

United States v. One 1970 Buick Riviera, 463 F.

2d 1168, certiorari denied sub nom. Nat'l Am.

Bank of New Orleans v. United States, 409

LE. |. | cr ee ee 29, 32, 37

United States v. One 1971 Ford Truck, 346 F.

Supp. 613__-_--- eee ee eee 28

United States v. Stowell, 183 U.S. 1_._-______-- 27, 22

United States v. Thirty-Seven (37) Photographs,

Cl ee. ee 9, 14, 16, 24

United States v. Troiano, 365 F. 2d 416,

certiorari denied, 385 U.S. 958__________- 13

United States v. 12 200-Ft. Reels of Super SMM

Film, No. 70-2, decided June 21, 1973____- 18

United States v. United States Coin & Currency,

rt) ae Oe. ay |b: See 5, 11, 26, 35, 36

United States v. Wright} 449 I’. 2d 1355_____- 23

Van Oster v. Kansas, 972 U.S. 465______- 31-32, 33

Yakus v. United a , o2l. U.S. 414.....2.. 37

Constitution, statutes, regulations and rules:

United States Constitution:

Page

First Amendment__________-___-__-__-__- 9, 23

Fourth Amendment______________-__-- 15, 21

Fifth Amendment-_____________-_- 5, 15, 35, 40

Fourteenth Amendment. _______--_-_-_- 5)

1 Stat. 39_.-.-2-- eee ~ 25

DONG r 02 nee oe ce ee eee eee n 37

41 Stat. 315.._.____-_-_-_. 2-2 --l ee 7

62 Stat. 9938__...___.._-_--_--_-- eee 15

Ks ae 6 Oe Wb ape eee eee 13

18 U.S.C. 3108a______-__--- eee aera 13

18 U.S.C. 3118_..---- eee eee 13, 41

TS US SO ie ees 13

1S US cs tee 30, 42

18 U.S.C. 3617(b)___-.----------------- 30, 34, 42

18 U.S.C. 3617(d)__ 2-2 ------ 14, 42

19 U.S.C. 1805(a)_....-.------------------ 24

1D Ue TO oes eee ee eee 18

19 U.S.C. 1594____-- 2-2 27, 34, 44

10 Us 100OR wecoes cece en eeeecakeuns 13, 45

Je OP. 5 ae |||: |e ne ve 29

19 U.S.C. 1604___.-. 2-22 - ee - 29

19 U.S.C. 1605, et seq... _----------------- 15

MO US 000 a cedwee weeneeeoesesaseuas 29

19 U.S.C. 1607, et seq. ___----------------- 14

10 Ui 110, oe ee eee eee 14

19 UBC 1616 va cekia dee eeeeeeenseess 29

10 UB 168 eae eeee ee eceess 15

19 USC. 1618 cciescceeenceeu 28, 30, 36, 38, 45

OTT SC a) aoc eian caweseneae 12

A Me 60 Os 7: 0G ) ee 30

OF UG, Obl A) ea cease terete 38

21 U.S.C. 881(a8)(4)(A)-------------- 27, 34, 37, 47

91 U.S.C. S8l(s) 4) CB) esc sceccecas 27, 47

Us 88) sew eeseeee ac ceqe coe eee 13

Vil

Constitution statutes and regulations—Continued page

21 U.S.C. 881(d)...............--....---- 28, 38

26 U.S.C. 7802.....;......----..+~-- 7, 13, 35, 50

ia OR. Oy fy a er ee eee 14

BG UBC. 1820. esate et ee eeeeee eee 14

2 me BR Coa fy en ee on 28

28 U.S.C. 1343_.....------------------+-- 4

28 U.S.C, (1940 ed.) 751__._--------------- 15

OR, Bote aera eee eee 4

OS US 226 he cere en eae eee 4

AG SCs GOT) ce cose ee es 27-28

AS 1S GC. 1016 oo cee nee eens 3

roe BES Oona (5 y Gane en Pee a 5

49 U.S.C. 781___.---------------------- 7, 29, 51

Le Ok Oey |. ee ere eee ee 21, 27, 28, 34, 52

24 L.P.R.A. (Cum. Supp. 1972) 2512__------ 19

24 L.P.R.A. (Cum. Supp. 1972) 2512(a)(4)- 4, 5, 20

24 L.P.R.A. (Cum. Supp. 1972) 2512(b)---- 4, 20

TS FN ak eC 1” ne ee 20

34 L.P.R.A. 1722(a)..'.------------------ 4,-5;

oS Pe ce «Oe Wy ¢7-((: |

19 C.F.R. 162.31(a)-...------------------- 28 *

ADCP ic 162. BAD) con eee eee nee 29

19 C.F.R. 162.48. _-.----------- beusaeoue 29

19 C.F.R. 162.49(a)_.-.-.----------------- 29

19 C.F.R. 171.1 (a)_.---------------------- 29

19 C.FLR. 171.12(b)_.--------------------- 28

EGA oy am he | (;) ee 28

je Oem Oe: am Wy ge b,c) ene er oe 28

LUE Gat Ue ae iy ¢ Ds + eee eee ee 28

28 C.F.R. 9.1, et seg_....------------------ 2°

Fed. R. Crim. P. 41(a)__..---------------- 13

Fed. upp, Ra Civ: Fs BS) ohio cwncqenccxes 15

VII

Miscellaneous: —

H. Rep. No. 1054, 76th Cong., Ist Sess_-_.--- 2,

“ 8, 29, 37, 40

S. Rep. No. 926, 76th Cong., Ist Sess_-_----- 8, 29

H. Rep. No. 308, 80th Cong., Ist Sess_-___-- 15

H. Rep. No. 2751, 81st Cong., 2d Sess__----- 8

S. Rep. No. 1755, 81st Cong., 2d Sess_--_---- 8

Gu the Supreme Court of the Gnited States

OcToBER TERM, 1973

No. 73-157

AstoL CALERO-TOLEDO, SUPERINTENDENT OF POLICE,

ET AL., APPELLANTS

Vv.

PEARSON YACHT LEASING COMPANY

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE DISTRICT OF PUERTO RICO

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

QUESTIONS PRESENTED

The United States will discuss the following ques-

tions:

1. Whether a statute authorizing seizure without a

prior adversary hearing (but with an opportunity for

a prompt post-seizure hearing) of property that is

subject to forfeiture because of its use for unlawful

purposes is unconstitutional on its face under the

Fifth Amendment.

529-604—74—2

(1)

2. Whether the forfeiture of a vehicle or vessel

used by a lessee for an unlawful purpose deprives

the owner of property without due process or con-

stitutes a taking without just compensation, where the

owner was not a participant in and did not know

of the unlawful use to which it was put.

INTEREST OF THE UNITED STATES

The district court has held unconstitutional a Puerto

Rican statute providing for forfeiture of vehicles or

vessels used for unlawful purposes by one in lawful

possession thereof. It found two defects in the statute:

(1) Its failure to provide notice and an adversary

hearing prior to seizure; and (2) its authorization

of forfeiture when the owner-lessor was neither aware

of nor involved in the unlawful act resulting in the

forfeiture.

Like most state legislatures, Congress has, begin-

ning in 1789, enacted a considerable number and

variety of laws providing for seizure and forfeiture;

these are similar to the Puerto Rican statutes in

various respects. Such laws provide an important tool

in the collection of revenue, control of imports, regula-

tion of firearms, gambling, and drug abuse, and other

federal law enforcement purposes. Government policy

and programs in such areas have been developed in

light of the long history of such forfeiture laws and

the numerous decisions of this Court sustaining their

validity. E.g., H. Rep. No. 1054, 76th Cong., Ist

Sess., p. 3. Because this Court’s decision concerning

the constitutionality of the Puerto Rican statutes

could have an important bearing on the validity and

application of the various federal forfeiture statutes,

the United States has a substantial interest in the

outeome of this case. A representative collection of

federal forfeiture statutes that could be affected by

the Court’s decision in this case is set forth in the

appendix to this brief, infra.

STATEMENT

We add only the following to the statement of the

ease in the appellants’ brief. Under the lease between

the appellee, Pearson Yacht Leasing Company, and

the lessees of the boat, the latter were to use the yacht

only for ‘‘any and all legal purposes” (App. 10),’

to obtain insurance for Pearson against “loss’’ of the

vacht ‘‘sustained in any manner whatsoever” (App.

8), and to assume all liability for and save Pearson

harmless from ‘‘all loss imposed by law resulting from

the use or operation” of the yacht (App. 9). The

lease also provided that ‘‘forfeiture” of the yacht was

not to diminish or discharge the obligation of the

lessees to pay rent (App. 9) and that, except upon

the written consent of Pearson, the yacht was to be

based at the home port of the lessees, specified as a

Puerto Rican address (App. 12, 14).

After the lessees had defaulted on the lease agree-

ment, Pearson learned of the seizure, resulting from the

discovery of marijuana on hoard, on October 19, 1972,

when Pearson alleges that it unsuccessfully attempted,

in a manner not disclosed by the record, to regain

possession of the vessel from the lessees (App. 3; see

»“App.” refers to appellants’ separately printed appendix.

App. 10, 28). Pearson did not thereafter file suit in

Superior Court as provided in 34 L.P.R.A. 1722(a)

(Br. App. 1a).? Rather, on November 6, 1972—more

than fifteen days later—Pearson filed suit in the United

States District Court for the District of Puerto Rico

under 28 U.S.C. 1343, seeking to compel the return

of the yacht, to have 24 L.P.R.A. (Cum. Supp. 1972)

2512(a) (4) and (b) and 34 L.P.R.A. 1722 declared un-

constitutional as applied to Pearson, and to enjoin en-

forcement of these statutes against its property. Pear-

son claimed that the statutes were unconstitutional

because they did not require that notice be given to the

owner of seized property and because they authorized

forfeiture of property of “an innocent party to the crim-

inal act for which the property was seized and subject to

forfeiture’? (App. 45). On Pearson’s motion a three-

judge court was convened, in accordance with 28

U.S.C, 2281.

The three-judge district court made two basic find-

ings.’ The court held that the failure of the forfeiture

statute to provide for a hearing prior to seizure was

inconsistent with due process under principles enun-

ciated in this Court’s decision in Fuentes v. Shevin,

407 U.S. 67 (App. 36-39). (The court, however, did

not specify the issues to be considered at such a pre-

2“Br. App.” refers to the appendix included in appellants’

brief. “Br.” refers to appellants’ brief. _

The court considered it unnecessary to reach the question

whether failure to provide proper notice to the owner before

forfeiture may violate due process standards, because it deter-

mined that, “[f]rom the record in this case, we are not disposed

to rule that the Commonwealth of Puerto Rico did not have

reason to believe that notice to the owner was, in fact, given”

(App. 36).

seizure hearing.) Im addition, insofar as the challenged

statutes authorized the forfeiture of property “of a

totally innocent person’’ in Pearson’s situation, the

court held that they took property without just com-

pensation in violation of the Constitution‘ and of

what it understood to be the teachings of Untted

States v. United States Coin & Currency, 401 U.S.

715 (App. 35-36). Accordingly, the court declared 24

L.P.R.A. 2512(a)(4) and 34 L.P.R.A. 1722(a) un-

constitutional and issued a permanent injunction

against the enforcement of the challenged provisions

(App. 39, 45). The court also found that, by virtue of

its holding, Pearson would be entitled to be paid the

appraised value of the vessel at the time of its seizure

($19,800; App. 28) plus 6 percent interest per annum

under 34 L.P.R.A. 1722(d), which authorizes such

damages for a person aggrieved by an illegal seizure

(App. 40).

In addition to the facts established by the stipulated

record in this case, there are a number of possibly per-

tinent factual matters not covered by the record. Thus,

the record does not reveal the extent to which, if at all,

Pearson either had, sought, or should have known in-

formation about the background or any possible crim-

inal record of the lessees. It is also not clear whether

*The statutes were challenged as violating the Fifth and

Fourteenth Amendments (App. 5), but the court did not specify

which it relied upon. Compare Fornaris v. Ridge Tool Co., 400

U.S. 41. It has been held that, to the extent that the Constitution

applies directly to the laws of Puerto Rico, they are subject to the

Fifth Amendment. Arroyo v. Puerto Rico Transp. Auth’y, 164

F.2d 748, 750 (C.A. 1). But see Balzac v. Porto Rico, 258 U.S. 298,

804-305; Stagg, Mather & Hough v. Descartes, 244 F.2d 578, 582-

583 .(C.A. 1). See also 48 U.S.C. 731d, 737.

~<.

the lessees were arrested at the time the marijuana

was discovered on the vessel on May 6, 1972, or

whether the police had a warrant or probable cause

to arrest or to search or seize the vessel or anything

in it at that time. The status or location of the vessel

between that date and its seizure on July 11, 1972, is

not disclosed by the record, nor is the reason for the

timing of the seizure. The record does not establish

when the appellants first learned of Pearson’s exist-

ence or relationship to the seized vessel. Finally, it is

not known whether Pearson has sought to pursue its

remedies against the lessees under the lease, whether it

intends to do so, or whether such remedies would be

likely to make Pearson whole.’

INTRODUCTION AND SUMMARY OF ARGUMENT

1. Forfeiture statutes are important and effective

tools in law enforcement and regulation. While the

ancient conceptual basis for forfeitures may lack con-

temporary vitality, forfeitures have in recent history

come to serve a variety of important governmental pur-

poses in connection with such diverse matters as reve-

nue collection, import control, and the regulation of

firearms, liquor, and drug abuse. Statutes authorizing

seizure and forfeiture generally represent an alterna-

tive or supplemental sanction and means of deterrence

of violations of the criminal laws.

Moreover, by removing from circulation property

that has been used—and may again be used—in viola-

5 While these facts are perhaps not essential for evaluation of

the facial validity of the statute, a determination of its unconsti-

tutionality as applied to Pearson could not properly be made with-

out considering these matters.

tion of the law, forfeiture provisions foster the purposes

of the underlying prohibitions or regulations.* Thus, the

further use of a vehicle or vessel for illicit transportation

was a danger Congress recognized from past experience

and specifically sought to prevent when, in 1939, it

enacted 49 U.S.C. 781 (App., infra, p. 51), which the

district court found (App. 34, n. 12) to be the model for

the Puerto Rican forfeiture law.’

* For example, the liquor prohibition statute (41 Stat. 315),

from which evolved the present general internal revenue for-

feiture statute (26 U.S.C. 7302 (App., infra, p. 50)), was de-

signed to remove from circulation both liquor and property

used in its manufacture, without regard to criminal conviction

of the offender. Had it been possible to seize and destroy all

liquor and the property used to miake it, the prohibition laws

would have been effective even if no offender were ever actually

convicted.

* The committee reports stated:

“The importance of this type of forfeiture laws is indicated

by the fact that it has been the tendency of Congress in recent

years to enlarge and increase the laws relating to the for-

feiture of vessels, vehicles, and aircraft. Thus, the act of June

19, 1934 (48 Stat. 1116), amended section 938 of the Revised

Statutes to make discretionary with the courts the former man-

datory provisions for the release under bond of vessels seized

for violations of the customs laws pending judicial proceedings

looking toward forfeiture. This amendment was made _neces-

sary by the fact that vessels seized for violations of the customs

laws and released on bond frequently returned immediately to

the smuggling traffic. Instances were not uncommon of vessels

being seized three or four times for different violations and

being released on bond each time before the first forfeiture

proceeding came up for trial. * * *

“The present legislation is necessary because there are no laws

which subject to forfeiture vessels, vehicles, and aircraft em-

ployed to facilitate violations of the counterfeiting laws or the

National Firearms Act and because the statutory provisions for

forfeiting vessels, vehicles, and aircraft used to facilitate vio-

In addition to preventing further illicit use of a

conveyance, seizure and forfeiture provide a means of

imposing an economic penalty against those who use

conveyances to break the law, thereby making law-

breaking unprofitable.* Seizure and forfeiture statutes

also help to compensate the government for the cost

of apprehending law violators or otherwise admin-

istering its regulatory programs, and provide a

method of obtaining security for debts, penalties and

fines owed to the government. See Helvering v.

Mitchell, 303 U.S. 391, 400-401; One Lot Emerald Cut

Stones v. United States, 409 U.S. 232, 237.

2. In authorizing seizure of property subject to for-

feiture without prior notice or adversary hearing, the

lations of the narcotic laws are entirely inadequate. It is made

doubly necessary, because not infrequently the means of trans-

portation employed in violations of the laws involved in the

present bill are peculiarly adapted to such type of work as, for

instance, high-speed powerboats, fast cars with secret compart-

ments, and aircraft. If such means of transportation are not

forfeited, they will be readily available for future violations. * * *”

(H. Rep. No. 1054, supra, at pp. 2-3; S. Rep. No. 926, 76th Cong.,

1st Sess., p. 2.)

* As Congress has repeatedly stated in enacting forfeiture

provisions :

“Tt has been the experience of our enforcement officers that

the best way to strike at commercialized crime is through the

pocketbooks of the criminals who engage in it. By decreasing

the profits which make illicit activity of this type possible,

crime itself can also be decreased. Vessels, vehicles, and air-

craft may be termed the ‘operating tools’ of dope peddlers,

counterfeiters, and gangsters. They represent tangible major

capital investments to criminals whose liquid assets, if any, are

frequently not accessible to the Government.” (H. Rep. No. 1054,

supra, at p. 2; S. Rep. 926, 76th Cong., Ist Sess., p. 2. See also

H. Rep. No. 2751, 81st Cong., 2d Sess., p. 3; S. Rep. No. 1755, 81st

Cong., 2d Sess., p. 3.)

Puerto Rican forfeiture statutes involved in this case

are similar to virtually every other federal and state

forfeiture statute. The district court’s holding that the

Constitution requires prior notice and a hearing before

forfeitable property may be seized is an erroneous

extension of this Court’s decision in Fuentes v. Shevin,

407 U.S. 67. Seizure pursuant to a forfeiture statute

does not come within the rationale of Fuentes because

such statutes do not abdicate state control over state

power or permit private parties to serve their private

interests by unilaterally invoking state power; a state

official participates in the decision to make the seizure

and evaluates the need for it. In addition, a seizure

for forfeiture is very similar to an evidentiary seizure

pursuant to a warrant and may properly be compre-

hended within the exception recognized in Fuentes for

such seizures.

Pre-hearing seizure of forfeitable property was

recently upheld by this Court in United States v.

Thirty-Seven (37) Photographs, 402 U.S. 363. Any

requirement of prompt post-seizure judicial proceed-

ings established by that decision would be satisfied by

the Puerto Rican statute, assuming such require-

ments are applicable when the seized property is not

arguably protected by the First Amendment.

In any event, Pearson, as a lessor, had no right to

immediate possession of the vessel when it was seized,

and it thus has no standing to claim that the seizure

deprived it of property without due process of law.

3. Forfeiture statutes vary in their treatment of the

relationship of the owner of the property to the act

529-604—74——_3

resulting in forfeiture. In some instances a claim of

“innocence” by the owner is impossible because the

legislature has made ownership or possession of the

type of property involved unlawful or has provided

that no private property rights may exist in such

property. Even where the forfeitable status of prop-

erty derives from its use in a particular manner

rather than its intrinsic character, the relevance of

the owner’s relationship to the use resulting in the

forfeiture may depend upon the circumstances.

Where the owner is wholly incapable of preventing

its unlawful use, as where the property was im-

properly used by one who stole it or whose possession

of it was otherwise unlawful or unauthorized, most

statutes either explicitly or by construction would not

require forfeiture. However, where the improper use

was made by one to whom the owner had entrusted

the property (e.g., lessee, bailee, conditional vendee),

the statutes vary. Some would not require forfeiture

if the owner had no knowledge of or involvement

in the forfeiting act, whereas others contain no such

exemption, thereby in effect imposing strict liabil-

ity on the owner. The Puerto Rican statute and many

federal forfeiture statutes are in the latter category.

Such imposition of strict liability on the owner

furthers the basic purposes served by forfeiture stat-

utes by obliging property owners to take greater care

in deciding to whom they will entrust their property

and by causing them to take added precautions against

its improper use. As a reasonable means of achieving

a legitimate end, the application of forfeiture statutes

in such circumstances does not result in a deprivation

of property without due process or a taking of private

property for public use Without just compensation.

Accordingly, their constitutionality has been repeat-

edly sustained by this Court.

The district court erroneously concluded that the

prior decisions concerning the constitutionality of for-

feiture statutes as applied to the property of one in

Pearson’s situation had been overruled by this Court’s

decision in United States v. United States Coin & Cur-

rency, 401 U.S. 715. The issue presented here was not

before the Court in Coin & Currency and the Court

expressly disavowed any reconsideration of its prior

decisions on the subject. Nothing said in Coin & Cur-

rency or in any other decision of this Court under-

mines the continuing vitality of this Court’s long line

of decisions demonstrating the validity of the applica-

tion of the Puerto Rican forfeiture statute in the pres-

ent case.

Any potential constitutional problems arising from

the application of a forfeiture statute to the property

of an “innocent’’ owner in Pearson’s position are elim-

inated where there exists a judicial or administrative

procedure for remission or mitigation of forfeitures.

Such procedures exist with respect to nearly all fed-

eral forfeiture statutes, although they are apparently

not available under the Puerto Rican forfeiture

statute. However, we do not believe that the avail-

ability of such procedures is essential to the validity

of the statute, and this Court’s prior decisions have

not rested on such a basis.

Finally, we submit that Pearson is not in a position

to assert a deprivation of property by the operation of

the forfeiture statute. Under the lease agreement, Pear-

son has remedies against the lessee which, if pursued,

would fully recompense it for the value of the vessel.

The real impact of the forfeiture is on the lessees. If

the forfeiture were not sustained, however, the lessees

would be relieved of a legislatively imposed conse-

quence of their wrongdoing, and the purposes of the

forfeiture statute would be disserved.

ARGUMENT

I, DUE PROCESS DOES NOT REQUIRE AN ADVERSARY HEARING

PRIOR TO SEIZURE OF PROPERTY SUBJECT TO FORFEITURE

FOR HAVING BEEN USED IN THE COMMISSION OF AN

ILLEGAL ACT

A, TICE PROCEDURAL SETTING OF SEIZURES OF FORFEITABLE PROPERTY

The Puerto Rican forfeiture statute, like most for-

feiture statutes enacted by Congress or by the states,

provides, as the first step toward forfeiture, that the

property subject to forfeiture be seized prior to the

judicial forfeiture proceedings. Particular procedures

and standards relating to different aspects of the for-

feiture process vary among the Puerto Rican and the

various federal forfeiture statutes.

1. Initial authorization of seizure

The Puerto Rican statute, based on the Uniform

Vehicle, Mount, Vessel and Plane Seizure Act, pro-

vides that the seizure shall be made “by the Secretary

of Justice, the Secretary of the Treasury or the Police

Superintendent,’’ acting through their delegates. 34

L.P.R.A. 1722(a). While some federal forfeiture

statutes provide for the issuance of a warrant or other

process for seizure of forfeitable property and may

expressly require “cause” or “probable cause” before a

seizure may be made (e.g., 19 U.S.C. 1595a; 21 U.S.C.

881(b) ; 26 U.S.C. 7302; ef. 18 U.S.C. 3113), the ma-

jority, like the Puerto Rican statute, do not. A re-

quirement of “cause,’’ however, has been read into

some federal forfeiture statutes by judicial construc-

tion. L.g., United States v. Troiano, 365 F. 2d 416, 418

(C.A. 3), certiorari denied, 385 U.S. 958 (construing

49 U.S.C. 781-782) ; ef. Burge v. United States, 342

F’, 2d 408, 414 (C.A. 9), certiorari denied, 382 U.S.

829 (same).

In many cases the act resulting in forfeiture is a

crime and the grounds on which seizure and forfeiture

are authorized would also constitute grounds for an

ordinary seizure of property for evidentiary purposes,

either with or without a warrant.’ See generally 18

U.S.C. 3108a; Fed. R. Crim. P. 41(a). (The record

does not permit any definitive statements to be made as

to whether an evidentiary seizure, with or without a war-

rant, would have been justified here.) In other instances,

however, seizure may be authorized under a forfeiture

statute even though, due to absence of criminal intent or

for other reasons (cf. One Lot Emerald Cut Stones v.

United States, 409 U.S. 232), a seizure for use in crimi-

nal proceedings would not be epprepeisy See also 21

U.S.C. 334(a).

* Some forfeiture statutes require the conviction of the person

using the property before the forfeiture can become effective.

£.g..16 U.S.C. 171; ef. 18 U.S.C. 3611.

2. Necessity for judicial proceedings

Some statutes, like the Puerto Rican enactment,

provide for forfeiture of property without judicial

proceedings if the seizure is not challenged within a

specified time, but many federal statutes require

institution of judicial condemnation proceedings to

forfeit the property. E.g., 19 U.S.C. 1610 (condemna-

tion proceedings required in every case where value

of property seized under customs laws exceeds $2500) ;

26 U.S.C. 7323 (same as to forfeitures under Internal

Revenue Code) ; compare 19 U.S.C. 1607, et seq. (sum-

mary forfeiture proceedings under customs laws where

property value is $2500 or less) ; 26 U.S.C. 7325 (same

as to goods, wares or merchandise subject to forfeiture

under Internal Revenue Code).

3. Duration of forfeiture proceedings

Few statutes specify time limits within which for-

feiture proceedings must be commenced or completed

after seizure, but such time limits have been read

into some forfeiture statutes. F.g., United States v.

Thirty-Seven (37) Photographs, 402 U.S. 363; ef.

Sarkisian v. United States, 472 F. 2d 468 (C.A. 10),

certiorari denied, No. 73-252, October 23, 1973.

4. Possession of property pending final decision

Like the Puerto Rican statute, some forfeiture

statutes provide for the return of the seized property

to the owner pending disposition of the condemnation

proceedings. E.g., 18 U.S.C. 3617(d) (App., infra,

pp. 43-44) ; ef. 19 U.S.C. 1614.”° Even in the absence of

a statutory obligation to do so, moreover, the United

States may in appropriate cases enter into court-

approved stipulations permitting a bond to be sub-

stituted for seized property in forfeiture cases. Cf.

Rule E(5), Fed. Supp. R. Civ. P.

B. THE DISTRICT COURT MISAPPLIED FUENTES V. SHEVIN

Relying essentially upon Fuentes v. Shevin, 407

U.S. 67, the district court found the Puerto Rican

forfeiture statute unconstitutional ‘‘on its face” be-

cause it provides no procedure ‘‘whereby the seizure

can be contested before it is made” (App. 37). This

conclusion misconceives the thrust of Fuentes by

‘imposing Fifth Amendment restrictions against de-

privation of property on seizures otherwise lawful

under the Fourth Amendment; it also undermines the

legitimate exercise of a state’s police power to appre-

hend and convict lawbreakers, to regulate prohibited

activity, and to collect revenues and penalties.

1. Seizures of forfeitable property are not covered by the

; rationale of Fuentes

It is well established that due process does not

require an adversary hearing ‘‘in every conceivable

70 A general provision for release of seized property upon the

posting of a bond (28 U.S.C. (1940 ed.) 751) was omitted in

the codification of Title 28 in 1948 as being covered by 19

U.S.C. 1605, et seq. (see 62 Stat. 993; H. Rep. No. 308, 80th Cong.,

Ist Sess., p. A238), although those provisions are actually more

limited in scope.

case of government impairment of private interest.”

Cafeteria Workers v. McElroy, 367 U.S. 886, 894. The

procedures required for due process in a given cir-

cumstance depend upon the government function in-

volved as well as on the private interest that may

be affected by governmental action. Jd. at 895; Gold-

berg V. Kelly, 397 U.S. 254, 268 ; ef. Morrissey v. Brewer,

408 U.S. 471.

Accordingly, this Court has held in a variety of cir-

cumstances that governmental seizure or control of

private property in advance of the opportunity for an

adversary hearing is consistent with the demands of

due process. Such circumstances have included seizure

and destruction of unwholesome food (North Am.

Cold Storage Co. v. City of Chicago, 211 U.S. 306),

attachment of property of non-residents for jurisdic-

tional purposes (Ownbey v. Morgan, 256 U.S. 94), cre-

ation of liens on bank stock (Coffin Bros. & Co. v.

Bennett, 277 U.S. 29), seizure of property to pay taxes

(Phillips v. Cammissioner of Internal Revenue, 283

U.S. 589), state custody of inactive bank accounts

(Anderson Nat’l Bank v. Luckett, 321 U.S. 233),

control of failing savings and loan associations (Fahey

v. Mallonee, 332 U.S. 245), seizure of harmless articles

bearing misleading labels (Ewing v. Mytinger & Cas-

selberry, Inc., 339 U.S. 594), or seizure of allegedly

obscene imported matter (United States v. Thirty-

Seven (37) Photographs, supra). Most of the instances

in which deferral of a hearing has been sustained have

involved deprivation of property, rather than liberty,

reflecting this Court’s observation in Phillips v, Com-

misstoner, supra, 283 U.S. at 596-597:

Where only property rights are involved,

mere postponement of the judicial enquiry is

not a denial of due process, if the opportunity

given for the ultimate judicial determination of

the liability is adequate. * * * Delay in the judicial

determination of property rights is not uncom-

mon where it is essential that governmental

needs be immediately satisfied. * * *

Of course, where property is taken for essentially

private purposes, rather than to serve directly any

important governmental purpose, the justification for

deferral of a hearing is lessened. That was the situa-

tion in Fuentes and its precursor, Sniadach v. Family

Finance Corp., 395 U.S. 337.

Fuentes involved the validity of state statutes per-

mitting creditors, by way of replevin actions, ‘‘to seize

goods allegedly wrongfully detained—not wrongfully

taken—by debtors.’’ 407 U.S. at 79. All that was re-

quired to justify immediate seizure under those stat-

utes was the creditor’s bare assertion that he was

entitled to the property; no pre-seizure notice or

hearing was required. The Court found that those

statutory procedures resulted in a deprivation of

property without due process by “failing to provide

for hearings ‘at a meaningful time’ ’’—+.e., prior to

the seizure (407 U.S. at 80). As the Court pointedly

observed (id. ‘at 98):

The statutes * * * abdicate effective state

control over state power. Private parties, serv-

ing their own private advantage, may unilater-

529-604—74—_-4

ally invoke state power to replevy goods from

another. No state official participates in the

decision to seek a writ; no state official reviews

the basis for the claim to repossession; and no

state official evaluates the need for immediate

seizure. * * *

Seizure under most forfeiture statutes stands on a

totally different footing. These statutes involve the

exercise of state power to achieve critical public in-

terests and are not aimed at fostering the interests of

private litigants. Thus, summary seizure of a vehicle

or vessel may be proper in order to assure tn rem

jurisdiction over it for the purpose of imposing the

penalty of forfeiture or to prevent its further unlaw-

ful use. Dobbins’s Distillery v. United States, 96 U.S.

395; One Lot Emerald Cut Stones v. United States,

supra, 409 U.S. at 237." Accordingly, seizures for for-

feiture come within the “extraordinary situations”

exception to the requirement of pre-seizure notice and

hearing recognized in Fuentes. See also Boddie v.

Connecticut, 401 U.S. 371, 379. As the Court stated in

Fuentes, a prior hearing may be dispensed with if

(407 U.S. at 91):

the seizure has been directly necessary to se-

cure an important governmental or general

1 Some statutes authorizing seizure and forfeiture are part

of a system of control of imports and entry across national

borders (¢.g., 19 U.S.C. 1595a), a function that may be sub-

ject to less stringent constitutional restrictions than is purely

domestic regulation. See Carroll v. United States, 267 U.S. 132,

154; United States v. 12 200-Ft. Reels of Super 8MM Film,

No. 70-2, decided June 21, 1973, slip op., pp. 2-8; cf. Almeida-

Sanches v. United States, No. 71-6278, decided Jum 21, 1973,

slip op., pp. 6-7.

public interest. Second, there has been a special

need for very prompt action. Third, the State has

kept strict control over its monopoly of legit-

imate force: the person initiating the seizure

has been a government official responsible for

determining, under the standards of a narrowly

drawn statute, that it was necessary and justi-

fied in the particular instance. * * *

The seizure in this case appears to have satisfied

most of the foregoing criteria. It secured important

governmental interests, and it was initiated by a

government official responsible for determining under

the standards of a narrowly drawn statute that

the seizure was necessary and justified in the par-

ticular circumstances. Here the seizure guaranteed

Puerto Rico in rem jurisdiction over the vessel for

proceedings based on its use in violation of the Puerto

Rican Controlled Substances Act (24 L.P.R.A. (Cum.

Supp. 1972) 2512), thereby serving a leigtimate public

interest in assuring its availability as a fine for wrong-

doing and preventing its further illicit use.

Failure to seize the vessel could have resulted in its

removal by persons who were unknown to the police

but possibly involved in the illegal transportation of

the marijuana.” Likewise, if at the time of the seizure

the users of the vessel were free (the record does

not reveal whether they had been admitted to bail),

there was the possibility that they might have re-

moved the vessel to a jurisdiction beyond the reach

12 The record does not reveal the reasons for the timing of

the seizure in this case nor whether it would have been feasible

to make the seizure sooner than it was made.

of Puerto Rican process. Finally, as appellee stipu-

lated (App. 23), the seizure was duly authorized by

the Puerto Rican Superintendent of Police pursuant

to the provisions of 24 L.P.R.A. 2512 (a)(4) and

(b), which incorporate the provisions of Puerto

Rico’s Uniform Vehicle, Mount, Vessel and Plane

Seizure Act, 34 L.P.R.A. 1722.

2. Seizures of forfeitable property are within the exception

recognized in Fuentes for evidentiary seizures

In addition to the Court’s recognition in Fuentes

of the above-described category of cases where notice

and opportunity for a hearing need not precede a

seizure or other deprivation of property, the Court

specifically noted that seizure of property under a

warrant was an “entirely different’’ situation (407

U.S. at 93-94, n. 30) :

The seizure of possession under a writ of

replevin is entirely different from the seizure

of possessions under a. search warrant. First,

a search warrant is generally issued to serve a

highly important governmental need—e.g., the

apprehension and conviction of criminals—

rather than the mere private advantage of a

private party in an economic transaction.

Second, a search warrant is generally issued in

situations demanding prompt action. The danger

is all too obvious that a criminal will destroy

or hide evidence or fruits of his crime if given

any prior notice. Third, the Fourth Amendment

guarantees that the State will not issue search

warrants merely upon the conclusory application

of a private party. It guarantees that the State

will not abdicate control over the issuance of war-

rants and that no warrant will be issued without

a prior showing of probable cause. Thus, our

decision today in no way implies that there

must be opportunity for an adversary hearing

before a search warrant is issued * * *,

The issuance of a warrant, moreover, is not essen-

tial to exclude a seizure from the operation of the

Fuentes principle, for this Court has reiterated since

Fuentes the long-settled rule that, at least as to con-

traband and vehicles or other mobile conveyances,

seizures may lawfully be made even in the absence of

a warrant—and, a fortiori, the absence of any prior

notice or opportunity to be heard. Cady v. Dom-

browski, No. 72-586, decided June 21, 1973; see, e.9.,

Chambers v. Maroney, 399 U.S. 42.*°

These reasons apply equally to seizures for forfei-

ture, some of which may indeed be undertaken pur-

suant to a warrant (see pp. 12-13, supra), in which event

prior notice and an adversary hearing would be un-

** No question has been raised or decided in this case concern-

ing the applicability of the Fourth Amendment, including the

warrant requirement, to seizures for forfeiture. Although it has

long been understood that such seizures ordinarily may be made

without a warrant (cf. Cooper v. California, 386 U.S. 58),

a three-judge district court has recently held that such seizures

are subject to essentially the same warrant requirements as are

evidentiary searches, and that a federal forfeiture statute (49

U.S.C. 782) should be construed as incorporating the warrant

requirements of the Fourth Amendment. Melendez v. Shultz,

Civ. No. 72-3230-F (D. Mass.), decided March 30, 1973, appeal

dismissed, No. 73-1173 (C.A. 1), decided November 5, 1973. We

are presently considering whether to seek further review in

that case.

necessary. Indeed, in many cases the circumstances

that would subject property to forfeiture involve

criminal violations, and the property would be subject

to seizure for evidentiary purposes without a prior

hearing and perhaps without a warrant. At least in

such cases, it would be illogical and impractical to

hold that a forfeiture would be barred because there

had been no pre-seizure adversary hearing.

Even where the property is not subject to seizure

for evidentiary purposes, substantial governmental in-

terests militate against a requirement of pre-seizure

notice and hearing. In many if not most instances,

it would not be practical to provide notice and an

adversary hearing prior to seizure. Even in circum-

stances (such as may have existed in this case) where

the substance being unlawfully transported has been

seized and those in possession of the vehicle or vessel

have been arrested, pre-seizure notice to the owner

of the vehicle or vessel would alert persons with an in-

terest in it that seizure is imminent, thereby perhaps

allowing others not yet apprehended but also guilty

of the illicit transportation of the substance (or

simply desirous of preventing forfeiture) to remove

the unseized vehicle or vessel surreptitiously and es-

cape legal sanctions.“*

The court below failed to indicate the form that the

pre-seizure hearing it would require must take, nor

did it delineate what elements the government would

14 The record here does not indicate whether the lessees were

arrested or were in custody at the time of the seizure or

whether it would have been practicable to obtain a warrant for

the seizure of the vessel.

be required to establish in order to justify a seizure.

Even assuming arguendo that a pre-seizure adversary

proceeding were necessary in some circumstances, we

submit that the issues should be confined in a manner

similar to a preliminary hearing in a criminal case, and

that the government should not be compelled to make a

plenary showing in support of the forfeiture (particu-

larly if the necessary showing includes a demonstration

of the owner’s “innocence’’ of complicity in the unlawful

act serving as the predicate for forfeiture) .”

In related circumstances, this Court has recognized

that the practical requirements of law enforcement

may make it necessary to dispense with some of the

formal procedures that might otherwise be required.

Thus, the courts have held that law enforcement officers

are not powerless to act in situations where they have

probable cause to believe that criminal activity is im-

minent or underway (¢.g., Carroll v. United States,

supra), that dangerous substances may be introduced

into commerce (¢.g., United States v. Kordel, 397 U.S.

1), or that there is a possibility that evidence or con-

traband may be destroyed or removed (e.g., United

States v. Wright, 449 F. 2d 1355, 1361-1362 (C.A.

D.C.)). As this Court stated in Carroll v. United

States, supra, 267 U.S. at 153, it is not always prac-

tical to obtain a search warrant to search for contra-

band in a ship, motor-boat, wagon, or automobile,

because such conveyances can readily be moved.

** We are not dealing here with any First Amendment in-

terest in the property seized, which might implicate special

considerations concerning pre-seizure hearings. See p. 24, infra.

The same reasoning should apply to seizures for

forfeitures.

Cc. THE DISTRICT COURT DECISION IS INCONSISTENT WITH THIS

COURT’S DECISION IN THIRTY-SEVEN PHOTOGRAPHS SUSTAINING

SEIZURE IN ADVANCE OF JUDICIAL PROCEEDNGS

In United States v. Thirty-Seven (37) Photographs,

402 U.S. 363, this Court construed and upheld a stat-

ute providing for forfeiture of obscene imported

matter notwithstanding the provision for seizure in

advance of judicial proceedings.** See 19 U.S.C. 1305

(a). The Court held that such seizure was not im-

proper so long as the judicial proceedings required

by the statute were commenced within 14 days after the

seizure and completed within 60 days after the seizure,

unless further delays were caused by actions of the

person claiming the seized property. The time limits

in the Puerto Rican forfeiture statute (under which the

claimant is entitled to give bond and ave the property

returned within ten days of challenging the seizure) are

consistent with the requirements of Thirty-Seven Pho-

tographs."

D. PEARSON, AS LESSOR OR CONDITIONAL VENDOR, LACKS STANDING TO

CHALLENGE THE VALIDITY OF THE SEIZURE ITSELF

Even if there were a potential deficiency in the

seizure provisions of the Puerto Rican forfeiture laws,

Pearson, as opposed to the lessees, does not have stand-

ing to assert that the seizure (as opposed to the for-

16 Although 7'hirty-Seven Photographs was not mentioned in

Fuentes, it was consistent with Fuentes and presumably was

not overruled sub silentio.

17 The validity of the instant seizure follows a fortiori from

Thirty-Seven Photographs, as there is here no problem of delay

constituting a form of otherwise prohibited censorship, as in

that case.

—_

—,

feiture) deprived it of property without due process

of law. Although it is stipulated that Pearson was the

“lawful owner’’ of the vessel at the time of the seizure

(App. 24), it was not then entitled to possession of it.

Hence, the seizure itself did not interfere with Pear-

son’s exercise of any rights it had concerning the ves-

sel. Any deprivation of Pearson’s rights was caused

not by the seizure but by the subsequent forfeiture, a

matter to be discussed below.

Indeed, it may be that a seizure of a vehicle or ves-

sel, when it is being used for illegal purposes by one

having possession under a lease or conditional sales

contract, actually protects the proprietary interests &

the lessor or seller. If not seized, the lawbreakers or

their confederates could abscond and remove the ve-

hicle or vessel beyond the control of both the state and

the lessor or owner. Even where all the wrongdoers are

arrested, the owner’s interests would not likely be

served if the state were to abandon the property

‘ xather than to seize it.

II. FORFEITURE OF A VEHICLE OR VESSEL USED FOR UNLAW-

FUL PURPOSES BY A LESSEE DOES NOT DEPRIVE AN ‘“‘IN-

NOCENT” OWNER OF PROPERTY WITHOUT DUE PROCESS

OR RESULT IN A TAKING WITHOUT JUST COMPENSATION

A. THE VARIED SUBSTANTIVE PROVISIONS OF FORFEITURE STATUTES

In providing for forfeiture of a vessel or other

conveyance used to transport contraband, Puerto

Rican law has followed a legislative approach adopted

by the First Congress (e.g., 1 Stat. 39) and having

ancient historic roots. While it is true that forfeiture

laws originally reflected “the fiction that inanimate

objects themselves can be guilty of wrongdoing”’

(United States v. United States Coin & Currency, 401

U.S. 715, 719), Congress and state legislatures have

repeatedly found forfeiture proceedings to be a useful

and appropriate means for dealing with a variety of

law enforcement and regulatory purposes, thus

rendering academic the historic rationale of for-

feitures. See McGowan v. Maryland, 366 U.S. 420, 431-

449.

One distinction that is reflected in such statutes is

between “per se’? and “derivative”? contraband. See

One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S.

693, 699. An item is contraband per se if it is subject

to forfeiture because the legislature has declared that

no private property rights in it may exist, or that its

mere possession is unlawful. Cf. Trupiano v. United

States, 334 U.S. 699, 710; Untted States v. Jeffers, 342

U.S. 48, 53-54. An item is derivative contraband if it

is subject to forfeiture because it has been used in con-

nection with some unlawful activity, whether or not

involving a crime. Cf. One Lot Emerald Cut Stones

v. United States, supra.

Forfeiture statutes also differ in that under some

the forfeiture is mandatory or automatic, occurring

when the specified act occurs, whereas under others it is

discretionary or conditional and occurs only if and when

the state follows specified procedures. See One 1958

Plymouth Sedan v. Pennsylvania, supra, 380 U.S. at 699.

One consequence of this distinction is that, with a man-

datory forfeiture, title is said to vest in the state when

the forfeiting act occurs and is simply confirmed in

the forfeiture or condemnation proceeding, so that the

owner is unable after the forfeiting act to convey the

property even to a bona fide purchaser. E.g., Hen-

derson’s Distilled Spirits, 14 Wall. 44, 56-57;

Thacher’s Distilled Spirits, 103 U.S. 679; United

States v. Stowell, 133 U.S. 1, 18-19.

Forfeiture statutes also vary in their treatment of

the owner’s alleged lack of involvement in or knowl-

edge of the acts resulting in the forfeiture. Some

statutes expressly exclude from their coverage prop-

erty used by a person other than the owner, when that

person’s possession was unlawful or acquired by viola-

tion of the criminal laws. E.g., 21 U.S.C. 881(a) (4)

(B); 49 U.S.C. 782. Even without such an explicit

limitation, however, it has long been settled that for-

feiture statutes do not apply when the property is

in the control of a thief at the time of the forfeiting

act, or where the forfeiting act is not done with the

‘‘eonsent or connivance” of either the owner of the

property or someone employed or entrusted by the

owner (as in this ease by means of the lease) with the

property. E.g., Peisch v. Ware (The Palmyra), 4

Cranch 347, 364; see Dobbins’s Distillery v. United

States, supra, 96 U.S. at 399, 401-402.

Federal forfeiture statutes also differ in their treat-

ment of forfeiting acts done, without knowledge or

involvement of the owner, by one who may be legiti-

mately in possession of the property when doing the

act. A few such statutes expressly exclude from their

scope property used in violation of the law as to which

the owner (or person in charge of the property for

the owner) was not ‘‘a consenting party or privy”

(e.g., 19 U.S.C. 1594; 21 U.S.C. 881(a)(4)(A); 46

U.S.C. 961(b); 49 U.S.C. 782; see United States v.

One 1971 Ford Truck, 346 F. Supp. 613 (C.D. Cal.)),

but many do not. Moreover, most federal forfeiture

statutes provide for discretionary administrative *

18 With respect to items seized or fines, penalties and forfeit-

ures incurred under the customs or navigation laws, the Sec-

retary of the Treasury is authorized under 19 U.S.C. 1618 to

mitigate or remit any such fine, penalty or forfeiture “upon

such terms and conditions as he deems reasonable and just,” or

to order discontinuance of any prosecution relating thereto,

if he finds that such fine, penalty, or forfeiture was in-

curred without willful negligence or without any intention

on the part of the petitioner to defraud the revenue or to

violate the law, or finds the existence of such mitigating

circumstances as to justify the remission or mitigation of

such fine, penalty, or forfeiture * * *.

Forfeitures under various other federal laws have been made

subject to Section 1618. £.g., 21 U.S.C. 881(d) ; 26 U.S.C. 7327.

The applicable regulations implementing this statute provide

that any person who appears to have an interest in the seized

property must be given written notice (19 C.F.R. 162.31(a) )

of its liability to forfeiture and of his right to petition the Sec-

retary of the Treasury for remission or mitigation of the for-

feiture under 19 U.S.C. 1618. A petition for such relief must

be filed within 60 days from the date the notice of forfeiture

was mailed. 19 C.F.R. 171.12(b). If the seized property was

in the possession of another who was responsible for the act

which resulted in the seizure, the petitioner must produce evi-

dence explaining the manner in which the other person ac-

quired possession and showing that, prior to parting with the

property, he did not know or have reasonable cause to believe

that the property would be used in violation of the law or that

the violator had a criminal record or a reputation for commer-

cial crime. 19 C.F.R. 171.13(a). These provisions are also ex-

tended to those holding chattel mortgages or conditional sales

contracts. 19 C.F.R. 171.13(b). If the petitioner is not satisfied

with the decision, he may file a supplemental petition wthin 60

days of the decision. 19 C.F.R. 171.33.

If no petition is filed, or if, after consideration and decision

of a petition, it appears that legal proceedings in connection

with the seizure are necessary, the appropriate officer, after

appraising the merchandise (19 U.S.C. 1606; 19 C.F.R. 162.43),

must prepare a full report of the seizure for the United States

Attorney, giving all the relevant facts and circumstances. 19

U.S.C. 1603; 19 C.F.R. 162.32(b), 162.49(a). Upon receipt of

such a report, the United States Attorney is required “imme-

diately to inquire into the facts” and, if it appears probable

that a forfeiture has been incurred, “forthwith to cause the

proper proceedings to be commenced and prosecuted, without

delay.” 19 U.S.C. 1604. (Facts bearing on the “innocence” of the

owner that might be pertinent in a remission proceeding would

not be relevant in the judicial forfeiture proceeding, unless, of

course, the applicable statute so provides.

Under 19 C.F.R. 171.1(a) no administrative action may be

taken on any petition for reljef after the case has been

referred to the United States rney for institution of legal

proceedings. Any petitions received in that period must

be forwarded to the United States Attorney, and it is the At-

torney General who thereafter may allow remission or mitiga-

tion under the Secretary’s authority. See United States v. One

1970 Buick Riviera, 463 F. 2d 1168, 1170, n. 2 (C.A. 5), certiorari

denied sub nom. Nat'l Am. Bank of New Orleans v. United States,

409 U.S. 980. After the case has been adjudicated, the Secretary

of the Treasury reassumes jurisdiction and may still remit or

mitigate the forfeiture.

In addition, any person who has an interest in forfeited

property may petition the Secretary of the Treasury for remis-

sion or mitigation of the forfeiture of the property or any part

owned by him up-totliree months after its sale. See 19 U.S.C.

1613. Upon proof that the petitioner was unaware of the seiz-

ure and was in such circumstances as prevented him from know-

ing of it and that forfeiture was incurred without any negli-

gence or intent to defraud on his part, the Secretary may order the

proceeds of the sale or any part thereof restored to the

applicant.

Similar regulations apply to the Attorney General's authority

to remit or mitigate forfeitures under various laws. See 28

C.F.R. 9.1 et seq.

When it enacted 49 U.S.C. 781 in 1939, extending forfeiture

provisions to activities not previously covered, Congress also

extended the provisions for remission and mitigation to such

forfeitures, and it was expressly noted that a petition for re-

or judicial” relief from forfeiture through remis-

sion or mitigation if, for example, the forfeiture

was incurred “without willful negligence or without

any intention” on the part of the owner to violate

the law (19 U.S.C. 1618), or if the owner “had at

mission or mitigation is the proper remedy for the property

owner when alleviating circumstances exist. See H. Rep. No. 1054,

supra, at pp. 3-4; S. Rep. No. 926, supra, at p. 3.

* With respect to forfeitures decreed for violation of the

internal revenue laws relating to liquor, the court is given ex-

clusive jurisdiction to remit or mitigate the forfeiture. 18

U.S.C. 3617(a). Under 18 U.S.C. 3617(b), the court may not

remit or mitigate unless the claimant proves the following

elements :

(1) that he has an interest in such vehicle or aircraft.

as owner or otherwise, which he acquired in good faith,

(2) that he had at no time any knowledge or reason to

believe that it was being or would be used in the violation

of laws of the United States or of any State relating to

liquor, and (3) if it appears that the interest asserted

by the claimant arises out of or is in any way subject

to any contract or agreement under which any person

having a record or reputation for violating laws of the

United States or of any State relating to liquor has a

right with respect to such vehicle or aircraft, that, be-

fore such claimant acquired his interest, er such other

person acquired his right under such contract or agree-

ment, whichever occurred later, the claimant, his officer

or agent, was informed in answer to his inquiry, at the

headquarters of the sheriff, chief of police, principal

Federal internal-revenue officer engaged in the enforce-

ment of the liquor laws, or other principal local or

Federal law-enforcement officer of the locality in which

such other person acquired his right under such contract

or agreement, of the locality in which such other person

then resided, and of each locality in which the claimant

has made any other inquiry as to the character or fi-

nancial standing of such other person, that such other

person had no such record or reputation.

no time any knowledge or reason to believe that * * *

[the property] was being or would be used in the vio-

lation of” specified laws. 18 U.S.C. 3617(b); ef. 21

U.S.C. 334(d)(3). See generally United States v.

Morris, 10 Wheat. 246, 293-295; United States v. One

1936 Ford Coach, 307 U.S. 219.

In sum, under most federal forfeiture statutes, as

under the Puerto Rican statute, the seizure and for-

feiture are not barred by the fact that the owner or

lessor of property was neither aware of nor involved

in the unlawful utilization of the property by the

one to whose custody or control the property had

been entrusted. However, under nearly all federal

forfeiture statutes, administrative relief from the for-

feiture is available to ‘‘innocent” owners of the

property.

B. THIS COURT HAS FREQUENTLY UPHELD THE CONSTITUTIONALITY

OF STATUTES PROVIDING FOR FORFEITURE OF PROPERTY NOTWITH-

STANDING THE “INNOCENCE” OF THE OWNER OF THE PROPERTY

This Court has frequently considered and rejected

the contention that the application of forfeiture laws

to the property of an owner who was ‘not aware of or

involved in the act subjecting the property to for-

feiture results in a deprivation of property without

due process or a taking of property without just com-

pensation. E.g., Harmony v. United States (Brig

Malek Adhel), 2 How. 210, 233-235; Dobbins’s Distil-

lery v. United States, supra; J.W. Goldsmith Jr.-

Grant Co. v. United States, 254 U.S. 505; United

States v. One Ford Coupe, 272 U.S. 321; Van Oster v.

Kansas, 272 U.S. 465; ef. United States v. One 1970

Buick Riviera, 463 F. 2d 1168 (C.A. 5), certiorari

denied sub nom. Nat’l Am. Bank of New Orleans v.

United States, 409 U.S. 980; United States v. One

1967 Ford Mustang, 457 F. 2d 931 (C.A. 9), certiorari

' denied sub nom. Bank of Am. Nat’l Trust & Sav.

Ass’n v. United States, 409 U.S. 850. But ef. United

States v. Stowell, supra, 133 U.S. at 19-20 (forfeiture

of mortgaged land used for illegal purposes covers

only the mortgagor’s interest—equity of redemption—

where mortgagee was unaware of the forfeiting act).

It is thus “well established’’ that, in the absence of a

statute to the contrary, “property may be seized and

statutorily forfeited without payment of any compen-

sation even though its owner may not have engaged in

any conduct which may be characterized as criminal

or wilfully negligent.” McKeehan vy. United States,

438 F. 2d 739, 742 (C.A. 6). |

The rationale of these decisions is that it is neither

unreasonable nor constitutionally impermissible for a

legislature to impose, in effect, strict or absolute liabil-

ity upon owners of property, with respect to persons to

whom they lend, lease, sell or otherwise entrust their

property, just as courts and legislatures have imposed

strict liability without fault upon those who engage in

certain activities. Z.g., New York Cent. R.R. v. White,

243 U.S. 188, 204; Exner v. Sherman Power Constr.

Co., 54 F. 2d 510, 512-515 (C.A. 2). Thus, “it may be

said, that Congress interposes the care and respon-

sibility of [the owner] * * * in aid of the prohibitions

of the law and its punitive provisions.” J. W. Gold-

smith, Jr.-Grant Co. v. United States, supra, 254 U.S.

at 510.

As this Court pointed out in Van Oster v. Kansas,

supra, 272 U.S. at 467-468:

It is not unknown or indeed uncommon for

the law to visit upon the owner of property the

unpleasant consequences of the unauthorized

action of one to whom he has entrusted it. Much

of the jurisdiction in admiralty, so much of the

statute and common law of liens as enables a

mere bailee to subject the bailed property to a

lien, the power of a vendor of chattels in pos-

session to sell and convey good title to a

stranger, are familiar examples. They have their

counterpart in legislation imposing liability on

owners of vehicles for the negligent operation by

those entrusted with their use, regardless of a

master-servant relation. * * * They suggest that

certain uses of property may be regarded as so

undesirable that the owner surrenders his con-

trol at his peril. The law thus builds a

secondary defense against a forbidden use and

precludes evasions by dispensing with the ne-

cessity of judicial inquiry as to collusion between

the wrongdoer and the alleged innocent owner.

So here the legislature, to effect a purpose

~ clearly within its power, has adopted a device

consonant with recognized principles and there-

fore within the limits of due process.”

2°The legislative power to impose conditions or potential

liabilities upon the continued possession or use of a type of

property is but an adjunct of the recognized power to prohibit

such possession or use altogether. See, e.g., Hamilton v. Ken-

tucky Distilleries & Warehouse Co., 251 U.S. 146, 156-157.

Congress has, moreover, made discriminating legisla-

tive judgments in imposing on property owners liabil-

ity for forfeitures. Thus, under the principal federal

forfeiture statutes, a vehicle or vessel used as a com-

mon carrier is not subject to forfeiture unless the

owner or person in charge of it for the owner is “a

consenting party or privy’? to the unlawful action

which would otherwise subject the vehicle or vessel to

forfeiture. E.g., 19 U.S.C. 1594; 21 U.S.C. 881(a) (4)

(A); 49 U.S.C. 782. In other words, although the

owner is made strictly liable for the actions of persons

placed in charge of the vehicle or vessel, the unilateral

illegal activities of a passenger would not subject the

vehicle or vessel to forfeiture. Compare J. W. Gold-

smith, Jr.-Grant Co. v. United States, supra, 254 U.S.

at 512; United States v. One Ford Coupe, supra, 272

U.S. at 333.

In some of the provisions for remission or mitiga-

tion of forfeitures, Congress has explicitly imposed an

obligation on property owners to investigate the back-

ground of those to whom they entrust their property.

E.g., 18 U.S.C. 3617(b) ; see United States v. One 1936

Ford Coach, supra. In addition to such investigation,

a property owner may also protect against the risk of

forfeiture by procuring insurance or by requiring in-

demnification by the persons to whom the property is

entrusted. Indeed, in the present case the possibility

of “forfeiture” or any other “loss imposed by law’’ was

not only anticipated by Pearson but was also explicitly

covered by a provision of the lease requiring the

lessees to hold Pearson harmless from such hazards

(App. 9).

C. THIS COURT’S DECISION IN COIN € CURRENCY DID NOT OVERRULE

ANY PRIOR DECISIONS UPHOLDING THE VALIDITY OF FORFEITURE

STATUTES

In holding that application of the Puerto Rican

forfeiture statute under the circumstances of this case

would deprive Pearson of property without due proc-

ess or just compensation, the district court concluded

that the above-cited decisions of this Court ‘“‘have

since been overruled” by United States v. United

States Coin & Currency, supra. The portion of the

Coin & Currency opinion relied upon, however, was

dictum as regards the issues in this case.

The question in Coin & Currency was whether for-

feiture proceedings under 26 U.S.C. 7302 could be

regarded as sufficiently “criminal’’ in nature to be

subject to the prohibitions of the Fifth Amendment

concerning compelled self-incrimination. “ With re-

spect to the government’s contention that the

guilt of the owner of the forfeitable property is

irrelevant under 26 U.S.C. 7302, the opinion in Coin

& Currency expressly acknowledged that ‘“centuries

of history support the Government’s claim that for-

feiture statutes similar to this one have an extra-

ordinarily broad scope”’ (401 U.S. at 719) and specifi-

cally disavowed any reconsideration of the question

whether a forfeiture statute as broad as 26 U.S.C.

7302 is consistent with the Fifth Amendment’s due

process and just compensation provisions. Id. at

720-721.

21 This Court’s subsequent decision in One Lot EF merald Cut

Stones v. United States, supra, makes clear that Coin & Cur-

rency did not hold that al/ forfeiture proceedings should be

regarded as criminal in nature.

In short, Coin & Currency did not involve the issue

raised here and certainly did not overrule this Court’s

long line of decisions sustaining the constitutionality

of statutes like the Puerto Rican forfeiture statute

involved in this case.

D. FORFEITURE STATUTES IMPOSING STRICT LIABILITY UPON PROPERTY

OWNERS ARE STILL A VALID MEANS TO ACHIEVE IMPORTANT GOV-

ERNMENTAL ENDS

Apart from their historical acceptance, forfeiture

statutes are, as previously indicated (see pp. 6-8,

32-34, supra), supportable as a constitutionally per-

missible means of regulation and of implementation

of various important public purposes. As such, they

can be sustained whether or not they contain any

provision for remission or mitigation in particular

eases of hardship or extenuating circumstances. In

any event, where such provisions do exist, they must

surely be taken into account in laying to rest any

doubts that might otherwise exist as to the constitu-

tionality of forfeiture statutes as applied in particular

circumstances. |

Thus, in Coin & Currency this Court viewed the

forfeiture statutes ‘‘in their entirety,”’ including the

provisions for remission and mitigation. 401 U.S. at

721. After noting that the Secretary of the Treasury

was authorized to return seized property under 19

U.S.C. 1618 ‘‘upon such terms and conditions as he

deems reasonable and just,” the Court further ob-

served that “[i]t is not to be presumed that the Secre-

tary will not conscientiously fulfill this trust, and

the courts have intervened when the innocent peti-

tioner’s protests have gone unheeded’”’ (ibid.).” Com-

pare the congressional observation, in extending to

other areas the application of customs remission and

mitigation procedures in effect since 1790 (see 1 Stat.

122), that ‘‘[t]hroughout the whole period of enforce-

ment no undue hardship has been charged against

the customs forfeiture laws for the reason that * * ss

provision is made for the remission or mitigation of

forfeitures when alleviating circumstances exist.” H.

Rep. No. 1054, supra, at p. 3.

Finally, as this Court similarly indicated in Yakus

vy. United States, 321 U.S. 414, where a procedure is

available to avoid or ameliorate a deprivation of prop-

erty that might otherwise occur, one cannot contend

that constitutional rights are infringed, except upon a

22 The Court cited United States v. Edwards, 368 F. 2d 722

(C.A. 4) and Cotonificio Bustese, S.A. v. Morgenthau, 121 F.

2d 884 (C.A.D.C.). In general, the courts have held that the de-

cision of the Secretary or the Attorney General on a petition for

remission or mitigation is a matter of “discretion” not subject to

judicial review. £.g., United States v. One 1970 Buick Riviera,

supra; United States v. One 1967 Ford Mustang, supra.

Although the statutory standard and grant of discretion are

broad, so that judicial review would ordinarily be inappro-

priate or stringently circumscribed (compare Citizens to Pre-

serve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410-418), we

do not contend that the courts are totally disabled from cor-

recting manifest injustice in an extreme case. That decisions con-

cerning remission and mitigation of forfeitures are not inher-

‘ ently unsuited to judicial review is suggested by the fact that

some statutes provide for remission or mitigation by the court

decreeing the forfeiture (see, ¢.g., Pp. 30, supra, n. 19, and such

judicial de inations have been subject to appellate review by

this Court. E.g., United States v. One 1936 Ford Coach, supra.

showing that the procedure is incapable of affording

due process. That cannot be said of forfeiture statutes

containing provisions for remission or mitigation.”

E. IN VIEW OF THE PROVISIONS OF THE LEASE, PEARSON LACKS

STANDING TO CLAIM THAT THE FORFEITURE DEPRIVED IT OF

PROPERTY WITHOUT DUE PROCESS OR JUST COMPENSATION

Even if Pearson has standing to assert any claim in

the forfeited property under Puerto Rican law,* and

*° Tf this were a federal case, the vessel would presumably

be subject to forfeiture under 21 U.S.C. 881(a)(4), under

which Pearson’s “innocence,” while not a bar to forfeiture (cf.

21 U.S.C. 881 (a)(4)(A)), would be relevant to administra-

tive action on a petition for remission or mitigation. 21 U.S.C.

881(d); see 19 U.S.C. 1618. See generally pp. 28-29, supra,

n. 18. We are not in a position to represent to the court what

the position of the Secretary of Treasury or the Attorney Gen-

eral would be on such a petition filed by a person in Pearson’s

situation, because certain pertinent facts are not known, includ-

ing the information Pearson either had, sought or should have

known about the lessees’ background, the efforts made or to be

made by Pearson to enforce the lessees’ obligations under the

lease, and the likelihood of recovery through such efforts.

* We do not treat the jurisdictional question, which has been

briefed by the Commonwealth (Br. 14-15). The Commonwealth

notes that under the law of Puerto Rico, an interested party

has 15 days from notification of the forfeiture to institute court

proceedings. Here Pearson by its own admission knew of the

forfeiture by October 19, 1972 (App. 3), but did not seek

judicial relief until November 6, 1972. On the other hand, if it

is required that it be formally notified by the Commonwealth,

which has not yet occurred (App. 24), Pearson may not yet

be barred from pursuing a remedy in court. Compare Menkarell

v. Bureau of Narcotics, 463 F. 2d 88 (C.A. 3); Jaekel v. United

States, 304 F. Supp. 993 (S.D.N.Y.). The record does not reveal

when the Commonwealth became aware of Pearson’s existence

or relationship to the property, nor whether it should have

been able to notify Pearson of the seizure and forfeiture. How-

even if substantial constitutional questions might be

raised by application of a forfeiture statute against

an owner or lessor wholly innocent of involvement in

the forfeiting act, it is doubtful that Pearson can in

the circumstances of this case be said to have been

deprived of its property by operation of the forfeiture

statute.

Under the lease, Pearson was entitled to receive the

agreed rentals and to recover possession of the vessel

or to recover its value, but.not both (App. 10-11).

Neither the lessees’ default nor the forfeiture termi-

nated the lessees’ contractual obligation to make Pear-

son whole. If they were to satisfy that obligation

(voluntarily or pursuant to litigation), Pearson would

be denied nothing by the forfeiture.”

The major impact of the forfeiture, whether it be

“penal” or otherwise in nature, is thus not on Pearson

but on the lessees.” While Pearson was technically the

legal owner of the vessel, its interest in it was essen-

tially reversionary; the vessel served as security for

the debt owed to it by the lessees. The forfeiture did

not extinguish that debt since, despite losing posses-

ever, the district court stated that it was not disposed to rule

on this record that the Commonwealth “did not have reason

to believe that notice to the owner was, in fact, given” (App.

36).

28The record does not disclose whether or to what extent

Pearson has recovered or may recover from the lessees.

This fact would have been even more dramatically ap-

parent if the forfeiture had occurred near the end of the five

year term of the lease, at which time the lessees would have

made virtually full payment and would have been entitled, by

paying $1.00, to divest Pearson of the technical status as “law-

ful owner.”

sion of the vessel, the lessees are still liable under the

lease. It is this continuing liability, in fact, which gives

the forfeiture statute its impact. See United States v.

One 1941 Pontiac Sedan, 83 F. Supp. 999, 1000-1001

(S.D.N.Y.) ; H. Rep. No. 1054, supra, at pp. 2-3. When

a forfeited vehicle or vessel is remitted to a lienholder

who had entrusted it to another (e.g., bailee, lessee,

conditional vendee) who used it for wrongdoing, the

latter’s obligation is thereby lessened and_ perhaps sat-

isfied, and his only loss is his equity in the vehicle or

vessel—frequently minimal dye to the property’s de-

preciation. Pearson’s real contention is thus that its

claim against the vessel as satisfaction of the lessees’

debt should be afforded legal precedence over the

Commonwealth’s forfeiture claim. It is not a violation

of the Fifth Amendment to deny Pearson that

precedence. "

CONCLUSION

For the foregoing reasons, the judgment of the dis-

trict court should be reversed.

Respectfully submitted.

Rosert H. Bork,

Solicitor General.

Henry E. PErersen,

Assistant Attorney General.

ANDREW L. Frey,

Deputy Solicitor General.

GERALD P. Norton,

Assistant to the Solicitor General.

JEROME M Fert,

JosePH S. Davies, Jr.,

Attorneys.

JANUARY 1974. ‘

i ipstcicacsieiille altace

APPENDIX

ExAMPLes OF FepERAL ForFEITURE STATUTES

1. TITLE 18

Sections 3113 and 3617 of the Judiciary and Judi-

cial Act of Procedure of June 25, 1948, 62 Stat. 820,

840, as amended, 18 U.S.C. 3113, 3617, provide as

follows:

§ 3113. Liquor VIOLATIONS IN INDIAN COUNTRY

If any superintendent of Indian affairs, or

commanding officer of a military post, or special

agent of the Office of Indian Affairs for the

suppression of liquor traffic among Indians and

in the Indian country and any authorized depu-

ties under his supervision has probable cause to

believe that any person is about to introduce or

has introduced any spirituous liquor, beer, wine

or other intoxicating liquors named in sections

1154 and 1156 of this title into the Indian coun-

try in violation of law, he may cause the places,

conveyances, and packages of such person to be

searched. If any such intoxicating liquor is

found therein, the same, together with such con-

veyances and packages of such person, shall be

seized and delivered to the proper officer, and

shall be proceeded against by libel in the proper

court, and forfeited, one-half to the informer

and one-half to the use of the United States. If

such pefson be a trader, his license shall be re-

voked and his bond put in suit.

Any person in the service of the United

States authorized by this section to make

searches and seizures, or any Indian may take

and destroy any ardent spirits or wine found in

the Indian country, except such as are kept or

(41)

used for scientific, sacramental, medicinal, or

mechanical purposes or such as may be intro-

duced therein by the Department of the Army.

In all eases arising under this section and sec-

tions 1154 and 1156 of this title, Indians shall

be competent witnesses.

§ 3617. REMISSION OR MITIGATION OF FORFEITURES

UNDER LIQUOR LAWS; POSSESSION PENDING TRIAL.

(a) Jurisdiction of court

Whenever, in any proceeding in court for the

forfeiture, under the internal-revenue laws, of

any vehicle or aircraft seized for a violation of

the internal-revenue laws relating to liquors,

such forfeiture is decreed, the court shall have

exclusive jurisdiction to remit or mitigate the

forfeiture.

(b) Conditions precedent to remission or miti-

gation

In any such proceeding the court shall not

allow the claim of any claimant for remission

or mitigation unless and until he proves (1)

that he has an interest in such vehicle or air-

craft, as owner or otherwise, which he acquired

in good faith, (2) that he had at no time any

knowledge or reason to believe that it was being

or would be used in the violation of laws of the

United States or of any State relating to liquor,

and (3) if it appears that the interest asserted

by the claimant arises out of or is in any way

subject to any contract or agreement under

which any person having a record or reputation

for violating laws of the United States or of any

State relating to liquor has a right with respect

to such vehicle or aircraft, that, before such

claimant acquired his interest, or such other

person acquired his right under such contract

or agreement, whichever occurred later, the

claimant, his officer or agent, was informed in

answer to his inquiry, at the headquarters of

the sheriff, chief of police, principal Federal

internal-revenue officer engaged in the enforce-

ment of the liquor laws, or other principal local

or Federal law-enforcement officer of the local-

ity in which such other person acquired his

right under such contract or agreement, of the

locality in which such other person then resided,

and of each locality in which the claimant has

made any other inquiry as to the character or

financial standing of such other person, that

such other person had no such record or repu-

tation.

Upon the request of any claimant whose

claim for remission or mitigation is allowed

and whose interest is first in the order of. pri-

ority among such claims allowed in such pro-

ceeding and is of an amount in excess of, or

equal to, the appraised value of such vehicle or

aircraft, the court shall order its return to him;

and, upon the joint request of any two or more

claimants whose claims are allowed and whose

interests are not subject to any prior or inter-

vening interests claimed and allowed in such

proceedings, and are of a total amount in ex-

cess of, or equal to, the appraised value of such

vehicle or aircraft, the court shall order its re-

turn to such of the joint requesting claimants

as is designated in such request. Such return

shall be made only upon payment of all ex-

penses incident to the seizure and forfeiture in-

curred by the United States. In all other cases

the court shall order disposition of such vehicle

or aircraft as provided in sections 304f-304m

of Title 40, and if such disposition be by public

sale, payment from the proceeds thereof, after

satisfaction of all such expenses, of any such

claim in its order of priority among the claims

allowed in such proceedings.

(d) Delivery on bond pending trial

In any proceeding in court for the forfeiture

under the internal-revenue laws of any vehicle

or aircraft seized for a violation of the internal-

revenue laws relating to liquor, the court shall

order delivery thereof to any claimant who shall

establish his right to the immediate possession

thereof, and shall execute, with one or more

sureties approved by the court, and deliver to

the court, a bond to the United States for the

payment of a sum equal to the appraised value

of such vehicle or aircraft. Such bond shall be

conditioned to return such vehicle or aircraft at

the time of the trial and to pay the difference

between the appraised value of such vehicle or

aircraft as of the time it shall have been

. so released on bond and the appraised value

thereof as of the time of trial; and conditioned

' further that, if the vehicle or aircraft be not

returned at the time of trial, the bond shall

stand in lieu of, and be forfeited in the same

manner as, such vehicle or aircraft. Notwith-

standing this subsection or any other provisions

of law relating to the delivery of ssion on

bond of vehicles or aircraft sought to be for-

feited under the internal-revenue laws, the

court may, in its discretion and upon good

cause shown by the United States, refuse to

order such delivery of possession.

2. TITLE 19

Sections 594, 596, and 618 of the Tariff Act of

1930, 46 Stat. 754, as amended, 19 U.S.C. 1594,

1595a and 1618, provide as follows: *

§ 1594. LIBEL OF VESSELS AND VEHICLES

Whenever a vessel or vehicle, or the owner or

master, conductor, driver, or other person in

charge thereof, has become subject to a penalty

for violation of the customs-revenue laws of the

United States, such. vessel or vehicle shall be

held for the payment of such penalty and may

be seized and proceeded against summarily by

libel to recover the same: Provided, That no

vessel or vehicle used by any person as a com-

mon carrier in the transaction of business as

such common carrier shall be so held or subject

to seizure or forfeiture under the customs laws,

unless it shall appear that the owner or master

of such vessel or the conductor, driver, or other

person in charge of such vehicle was at the time

of the alleged illegal act a consenting party or

privy thereto.

§ 1595a. FORFEITURES; PENALTY FOR AIDING UN-

LAWFUL IMPORTATION

(a) Except as specified in the proviso to sec-

tion 1594 of this title, every vessel, vehicle,

animal, aircraft, or other thing used in, to aid

in, or to facilitate, by obtaining information or

in any other way, the importation, bringing in,

unlading, landing, removal, concealing, harbor-

ing, or subsequent transportation of any article

which is being or has been introduced, or at-

tempted to be introduced, into the United

States contrary to law, whether upon such ves-

sel, vehicle, animal, aircraft, or other thing or

otherwise, shall be seized and forfeited together

with its tackle, apparel, furniture, harness, or

equipment. ~

(b) Every person who directs, assists finan-

cially or otherwise, or is in any way concerned

in any unlawful activity mentioned in the pre-

ceding subsection shall be liable to a penalty

equal to the value of the article or articles in-

troduced or attempted to be introduced.

§ 1618. REMISSION OR MITIGATION OF PENALTIES

Whenever any person interested in any

vessel, vehicle, merchandise, or baggage seized

under the provisions of this chapter, or who

has incurred, or is alleged to have incurred,

any fine or penalty thereunder, files with the

Secretary of the Treasury under the customs

laws or under the navigation laws, before the

sale of such vessel, vehicle, merchandise, or

baggage a petition for the remission or mitiga-

tion of such fine, penalty, or forfeiture, the

Secretary of the Treasury, if he finds that such

fine, penalty, or forfeiture was incurred without

willful negligence or without any intention on

the part of the petitioner to defraud the rev-

enue or to violate the law, or finds the existence

of such mitigating circumstances as to justify

the remission or mitigation of such fine, penalty,

or forfeiture, may remit or mitigate the same

upon such terms and conditions as he deems

reasonable and just, or order discontinuance

of any prosecution relating thereto. In order

to enable him to ascertain the facts, the Seere-

tary of the Treasury may issue a Commission

to any customs officer to take testimony upon

such petition: Provided, That nothing in this

section shall be construed to deprive any person

of an award of compensation made before the

filing of such petition.

$ 3. TITLE 21

Section 511(a) of Title II of the Comprehensive

Drug Abuse Prevention and Control Act of Octo-

ber 27, 1970, 84 Stat. 1274,-as amended, 21 U.S.C.

881, provides as follows:

§ 881. Forreirures

(a) Property subject

.The following shall be subject to forfeiture

to the United States and no property right shall

exist in them:

(1) All controlled substances which have been

manufactured, distributed, dispensed, or ac-

quired in violation of this subchapter.

(2) All raw materials, products, and equip-

ment of any kind which are used, or intended

for use, in manufacturing, compounding, proc-

essing, delivering, importing, or exporting any

controlled substance in violation of this sub-

chapter.

(3) All property which is used, or intended

for use, as a container for property described

in paragraph (1) or (2).

(4) All conveyances, including aircraft, ve-

hicles, or vessels, which are used, or are in-

tended for use, to transport, or in any manner

to facilitate the transportation, sale, receipt,

possession, or concealment of property described

in paragraph (1) or (2), except that—

(A) no conveyance used by any person as a

common carrier in the transaction of business

as a common carrier shall be forfeited under

the provisions of this section unless it shall

appear that the owner or other person in charge

of such conveyance was a consenting party or

privy to a violation of this subchapter or sub-

chapter IT of this chapter; and

(B) no conveyance shall be forfeited under

the provisions of this section by reason of any

act or omission established by the owner there-

of to have been committed or omitted by any

person other than such owner while such con-

veyance was unlawfully in the possession of a

person other than the owner in violation of the

_eriminal laws of the United States, or of any

State.

(5) All books, records, and research, inelud-

ing formulas, microfilm, tapes, and data which

are used, or intended for use, in violation of

this subchapter.

4. TITLE 26

Sections 5688, 7301, and 7302 of the Internal Reve-

nue Code of 1954, 68A Stat. 867, as amended, 26

U.S.C. 5688, 7301 and 7302, provide as follows:

§ 5688. DisPosITION AND RELEASE OF SEIZED

PROPERTY*

= # #

courts

Notwithstanding any provisions of law relat-

ing to the return on bond of any vessel or ve-

hicle seized for the violation of any law of the

United States, the court having jurisdiction of

the subject matter may, in its discretion and

upon good cause shown by the United States,

refuse to order such return of any such vessel

or vehicle to the claimant thereof. As used in

this subsection, the word ‘‘vessel’’ includes

every description of watercraft used, or capable

of being used, as a means of transportation in

water or in water and air; and the word “ve-

hicle’”’ includes every animal and description of

carriage or other contrivance used, or capable

of being used, as a means of transportation on

land or through the air. 3

§ 7301. Property SUBJECT TO TAX

(a) Tazable articles

Any | eng on which, or for or in respect.

whereof, any tax is imposed by this title which

shall be found in the possession or custody or

within the control of any person, for the pur-

pose of being sold or removed by him in fraud ~

of the internal revenue laws, or with design to

avoid payment of such tax, or which is removed,

*This section is applicable only to beer and brewing violations.