Does Interest Always Follow Principal?: a Prisoner's Property Right to the Interest Earned on His Inmate Account Under Young v. Wall, 642 F.3d 49 (1st Cir. 2011)

• Publication year: 2021

92 Nebraska L. Rev. 212. Does Interest Always Follow Principal?: A Prisoner's Property Right to the Interest Earned on His Inmate Account Under Young v. Wall, 642 F.3d 49 (1st Cir. 2011)

Does Interest Always Follow Principal?: A Prisoner's Property Right to the Interest Earned on His Inmate Account Under Young v. Wall, 642 F.3d 49 (1st Cir. 2011)

Emily Tunink(fn*)

TABLE OF CONTENTS

I. Introduction .......................................... 213

II. Background ........................................... 214
A. Traditional Sources of Property Rights ............. 214
1. Statutory Law and Policy and Practice ......... 215
2. Common Law: "Interest Follows Principal" ..... 216
B. The Split: Property Rights to the Interest Earned on Inmate Accounts .................................. 218
1. Schneider v. California Department of Corrections .................................... 218
2. Washlefske v. Winston ......................... 219
3. Givens v. Alabama Department of Corrections . . 220
C. Young v. Wall Facts and Holding .................. 221

III. Analysis .............................................. 222
A. Balancing Act: Constitutional Rights in the Prison Environment ...................................... 222
1. Prisoner's Property Right to the Balance in His Inmate Account ................................ 224
2. Prisoner's Property Right to the Interest Earned on His Account Balance ........................ 230
B. Left Unconsidered: Should "Interest Follow Principal" in Prison Context? ...................... 233
C. Implications of Denying Interest to Inmates ........ 236

IV. Conclusion ............................................ 238

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I. INTRODUCTION

There is little doubt the Fifth Amendment of the United States Constitution protects ordinary citizens from unconstitutional takings.(fn1) However, the prison environment presents unique circumstances that call into question the applicability of this protection to prison inmates. In fact, many courts have denied prison inmates the property rights they maintained prior to incarceration.(fn2) One right that courts have denied prisoners is the property right to the interest earned on their inmate accounts.(fn3) Yet, not all courts have denied prisoners a property right to such interest, creating a definitive split among the federal courts of appeals.

On one side, courts applying the common law rule of "interest follows principal" contend that a prisoner maintains a property right to the interest that accrues on his inmate account. For example, in Schneider v. California Department of Corrections,(fn4) the Ninth Circuit held that a prisoner had a property right to the interest earned on his inmate account because "interest follows principal" is a "'core' notion" that cannot be denied even to a prisoner.(fn5) On the other side, courts focusing on the unique circumstances of the prison environment contend that a prisoner has forfeited any property right to the interest earned on his account. For instance, a prisoner's lack of property rights at common law led both the Fourth Circuit in Washlefske v. Winston(fn6) and the Eleventh Circuit in Givens v. Alabama Department of Corrections(fn7) to conclude that a prisoner has no property right to the interest earned on his inmate account and, thus, cannot claim that such property was unconstitutionally taken.(fn8)

In 2011, the First Circuit Court of Appeals was confronted with the same substantial issue in Young v. Wall(fn9) that had previously split the federal circuit courts. After the First Circuit analyzed the decisions of the Fourth, Eleventh, and Ninth Circuits, it concluded that a prison inmate lacks a constitutionally protected property right to the interest not yet paid on his inmate account.(fn10)

Part II of this Note describes the traditional sources of property rights underlying the courts' opinions and then describes the split re-

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garding inmates' property rights on interest-bearing accounts among the federal courts of appeals. Part II also takes a closer look at Young v. Wall, examining the facts surrounding the case and the First Circuit's opinion.

Part III begins by analyzing the tension surrounding constitutional rights in the prison environment. The constitutional protections afforded to prisoners are of such importance that the Fourth and Eleventh Circuits used the Ninth Circuit's failure in Schneider to address the issue as justification for their refusal to follow the Ninth Circuit's reasoning. As Young borrows from the analysis in Washlefske and Givens, Part III next describes two problems with these opinions. First, an inmate does have a property right in the wages held in his inmate fund. Second, the common law rule that "interest follows principal" should apply in the prison context. Finally, Part III addresses whether interest should follow principal in the prison environment-a public policy issue left unaddressed by any of the courts' opinions. Part IV concludes that when a court completely addresses each aspect of the issue, a prisoner should have a constitutionally protected right to the interest that accrues on his inmate account.

II. BACKGROUND

A. Traditional Sources of Property Rights

In each case addressing whether a prisoner has a property right to the interest earned on an inmate account, the prisoner alleged that the prison's refusal to pay interest on the funds in the inmate account amounted to an unconstitutional taking of property.(fn11) The Takings Clause of the Fifth Amendment provides that "private property" shall not "be taken for public use, without just compensation."(fn12) In order to state a claim under the Takings Clause, a plaintiff must first demonstrate that he possesses a constitutionally protected "property interest."(fn13) Only if the plaintiff possesses such an interest is it necessary for a court to determine whether the deprivation of that interest constitutes a "taking" within the meaning of the Fifth Amendment.(fn14)

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It is this preliminary determination of whether a prisoner has a protected property right to the interest earned on his inmate account that has split the federal circuits.

It is an accepted tenant of property law that the Constitution protects rather than creates property interests.(fn15) Therefore, to determine whether one has a constitutionally protected property interest, and the nature and extent of that interest, the court must look to "existing rules or understandings that stem from an independent source such as [common law or] state law."(fn16) A unilateral expectation, by itself, is not sufficient to create a constitutionally protected property interest.(fn17) As such, the fact that a prison inmate expects that interest should or will be deposited in his account is not sufficient to create a protected property interest. Instead, the source must give rise to a "legitimate claim of entitlement" to the property.(fn18) The independent sources that can create a constitutionally protected property interest include statutory law, policy and practice, and common law.(fn19)

1. Statutory Law and Policy and Practice

A state can create a property interest by enacting a statute.(fn20) For instance, the Ninth Circuit held in Tellis v. Godinez that inmates have a property right to any interest that accrues on their accounts based on a Nevada statute providing that inmates are entitled to the interest.(fn21) It is important to note, however, that a state does not have unlimited power to redefine property rights by statute.(fn22) If a state was allowed to do so, it would be able to sidestep the arbitrary government action the Takings Clause was designed to prevent. As the Ninth Circuit stated, "[T]he States' power vis-?-vis property thus operates as a one-way ratchet of sorts: States may, under certain circumstances,

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confer "new property" status on interests located outside the core of constitutionally protected property, but they may not encroach upon traditional "old property" interests found within the core."(fn23) As a result, a state can create a new property interest by enacting a statute, but it cannot deny an "old property interest," such as those recognized at common law.

A state's policies and practices can also underpin a constitutionally protected property interest(fn24) by creating a "shared understanding" that a person possesses a certain property interest.(fn25) Therefore, when a prison has a unilateral policy stating that interest will be credited to the inmate's account, the policy has the potential to create a property right in that interest.(fn26) However, it is accepted that "[a] policy, once implemented, need not be continued in perpetuity but, rather, in the absence of special circumstances (say, detrimental reliance), may be modified or abandoned prospectively."(fn27) This ability to abandon a policy also applies in the prison context.(fn28) As a result, if the payment of interest is solely based on the prison's policies or practices, the prison can unilaterally withdraw its policy of paying interest on inmate funds. Yet, a prison cannot deny a prisoner property interests secured by either statutory or common law, regardless of whether such rights were reinforced by the prison's policies or practices.

2. Common Law: "Interest Follows Principal"

A fundamental source of property interests is the English common law rule that "interest shall follow the...