In Rem Civil Forfeiture

• Publication year: 2021
• Citation: Vol. 76

76 Nebraska L. Rev. 155. In Rem Civil Forfeiture

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Statutory In Rem Civil Forfeiture, the Punishment of Innocent Owners, and the Excessive Fines Clause: An Analysis of Bennis v. Michigan, 116 S. Ct. 994 (1996)

TABLE OF CONTENTS

I. Introduction 156

II. Background of In Rem Civil Forfeiture in the United States 156

A. The Guilty Property Fiction 157

B. The Owner-Property Relationship 157

III. The Underpinnings 160

IV. Recent Developments: Recognition of Owner's Protections 161

V. Austin v. United States 163

A. Forfeitures as Punishment and the Excessive Fines Clause 163

B. Forfeiture Based on Owner's Negligence 164

C. Justice Scalia's Concurrence 165

VI. Bennis v. Michigan 166

A. Statement of the Case 166

B. Analysis 171

C. Punishment: Now You See It, Now You Don't 173

1. Equitable Label of the Action 174

2. Deterrence By Any Other Name 175

VII. A Proposed Solution 177

VIII. Conclusion 182

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I. INTRODUCTION

"This case is ultimately a reminder that the Federal Constitution does not prohibit everything that is intensely undesirable."(fn1)

In Bennis v. Michigan,(fn2) the United States Supreme Court upheld the forfeiture of a wife's interest in a sedan, jointly owned by her and her husband, because the husband engaged in a sexual act with a prostitute in that sedan. The facial injustice of the ruling engenders an emotional protest, particularly because the subject matter concerns domestic relations and personal property, issues familiar to most Americans.

Statutory in rem civil forfeiture, which procedurally rests upon the fiction that property used unlawfully is itself guilty of the unlawful offense and should be punished by forfeiture, traditionally proceeds with no investigation as to the culpability of the owner. In the past forty years, the United States Supreme Court, in both dicta and holdings, has indicated a retreat from the strict application of the guilty property fiction and suggested the possibility of a constitutional innocent owner's defense to in rem forfeitures. Unfortunately, in Bennis, the United States Supreme Court once again refused to recognize a constitutional innocent owner's defense to statutory in rem civil forfeiture. The Court achieved this dubious result by calling into question the categorical definition of punishment in civil actions established in United States v. Halper(fn3) and Austin v. United States.(fn4)

This Note presents a brief review of the historical underpinnings of statutory in rem civil forfeiture in American jurisprudence and then examines the relatively recent contributions of United States Supreme Court cases, most notably Austin, which introduced constitutional protections available to owners in in rem forfeiture actions. Bennis v. Michigan is then introduced and analyzed, highlighting the Court's inconsistent reasoning in upholding the forfeiture in Bennis despite its holding in Austin, which was decided only three years earlier. Finally, this Note proposes a threshold test for application of the Excessive Fines Clause of the Eighth Amendment.

II. BACKGROUND OF IN REM CIVIL FORFEITURE IN THE UNITED STATES

Statutory in rem civil forfeiture has a history in the United States that is nearly as long as American jurisprudence itself. While it existed in various guises in England, it initially appeared in the United States in the context of admiralty and as a tool to enforce revenue and

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customs laws.(fn5) Forfeiture of property was commonly used against bootleggers during and after prohibition. Civil in rem forfeiture has lately become a favorite and oft-used tool in the fight against organized crime and the illegal drug trade.(fn6) Federal and state statutes provide for the forfeiture of property that is an "instrumentality" of criminal activity, as well as contraband and property that can be shown to be the proceeds of criminal activity.

A. The Guilty Property Fiction

A typical in rem action proceeds against the property to determine rights (usually title) in the property when a dispute arises between two or more parties. In rem forfeiture actions, like traditional in rem actions, proceed against the property, but in rem forfeiture actions differ in that they rest on the "guilty property" fiction. The guilty property fiction holds that if otherwise lawful property is used for an unlawful purpose, the property itself is considered to be guilty of the offense and therefore should suffer forfeiture. The owner is simply an interested nonparty.

It is the nonparty status of the owner that traditionally and procedurally prevents any opportunity to raise innocence as a defense to the forfeiture. Most civil in rem forfeiture statutes, such as those in the federal antidrug statutes, include a provision for an innocent owner's defense.(fn7) Occasional situations arise, however, when the property is used in an unlawful manner without the knowledge or consent of the owner to the unlawful use. The applicable statutes provide no "safe harbor" for innocent owners in these instances. To date, innocents have not fared well in forfeiture cases brought before the United States Supreme Court.

B. The Owner-Property Relationship

In 1827, in The Palmyra,(fn8) the Supreme Court made clear that the guilty property fiction, strictly applied, insulates the government from

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any need to consider the guilt or innocence of the property owner relative to the offense giving rise to the forfeiture. In The Palmyra, a case involving the forfeiture of a pirate vessel, Justice Story stated that "[t]he thing is here primarily considered as the offender, or rather the offence is attached primarily to the thing [T]he proceeding in rem stands independent of, and wholly unaffected by any criminal proceeding in personam."(fn9) According to the Palmyra Court, forfeiture may arise without any reference to the culpability of the owner. At English common law, a conviction of the owner was unnecessary in cases of "seizures and forfeitures, created by statute, in rem, cognizable on the revenue side of the Exchequer."(fn10)

Despite this common law tradition, the United States Supreme Court has stated in dicta that before a forfeiture will be sustained, there must exist some minimal nexus beyond ownership between the owner and the property being forfeited. In Peisch v. Ware,(fn11) the Court articulated the relationship required between owner and property. In Peisch, the government sought to forfeit cargo salvaged from a wrecked ship after the salvors who discovered the wreck, acting without consent or knowledge of the owner, removed the cargo from the custody of the customs agent before any duty had been paid.

[T]he removal for which the [forfeiture statute] punishes the owner with a forfeiture of the goods must be made with his consent or connivance, or with that of some person employed or trusted by him. If, by private theft, or open robbery, without any fault on his part, his property should be invaded, . . . the law cannot be understood to punish him with the forfeiture of that property . . .

[T]he law is not understood to forfeit the property of owners or consignees, on account of the misconduct of mere strangers, over whom such owners or consignees could have no controul.(fn12)

By this statement, the Court clearly delineates the two extremes of the spectrum of possible relationships between the owner and the unlawful property use: the "guilty" owner who uses his property unlawfully or knowingly consents to its unlawful use, and the "innocent" owner whose property is unlawfully used without his control, knowledge, or consent. Since Peisch, the Court has had no opportunity to consider a forfeiture concerning property used without any owner's consent whatsoever. It has consistently reserved the question of whether property may be forfeited if it is stolen from the owner and later used unlawfully.(fn13) But relationships falling in the gray area be

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tween the two extremes have regularly been found by courts to support forfeiture despite evidence of an owner's innocence. Ship owners, lessors, and secured creditors have all lost property through in rem forfeiture due to unlawful use of the property by others.

In United States v. The Cargo of the Brig Malek Adhel,(fn14) a case of a merchant ship crew that committed acts of piracy, the Court allowed forfeiture of the ship even though it acknowledged the proven innocence of the owners regarding the unlawful acts. "The vessel which commits the aggression is treated as the offender, as the guilty instrument or thing to which the forfeiture attaches, without any reference whatsoever to the character or conduct of the owner."(fn15)

In United States v. Dobbins's Distillery,(fn16) personal and real property was forfeited because, unknown to the owner, the lessee of the distillery cooked the books to defraud the government of revenue. Again, the offense attached to the property "without any regard whatsoever to the personal misconduct or responsibility of the owner, beyond what necessarily arises from the fact that he leased the property to the distiller, and suffered it to be occupied and used by the lessee as a distillery."(fn17)

A similar fate befell a secured creditor in Goldsmith-Grant v. United States.(fn18) The Grant Company sold a car and retained title against payments owed. The vehicle eventually was used to transport liquor in violation of the revenue laws, which contained no provision exempting the interests of innocent owners. The company argued that the relationship between buyer and secured creditor differed from the relationships found in previous cases. The company pointed out that in this situation no agency relationship existed and that the company, as owner, had no opportunity to determine the use to which the...