Supreme Court Syllabus & Decision
U.S. v. 92 Buena Vista Ave.
A Civil Forfeiture Case
Feb 24, 1993
Article 83 of courts.usa.federal.supreme:
Date: 24 Feb 1993 15:11:18 GMT
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
UNITED STATES v. A PARCEL OF LAND,
BUILDING, APPURTENANCES, AND
IMPROVEMENTS, KNOWN AS 92 BUENA VISTA
AVENUE, RUMSON, NEW JERSEY, et al.
certiorari to the united states court of appeals for
the third circuit
No. 91-781. Argued October 13, 1992-Decided February 24, 1993
The Government filed an in rem action against the parcel of land on
which respondent's home is located, alleging that she had purchased
the property with funds given her by Joseph Brenna that were "the
proceeds traceable'' to illegal drug trafficking, and that the property
was therefore subject to seizure and forfeiture under the
Comprehensive Drug Abuse Prevention and Control Act of 1970, 21
U. S. C. 881(a)(6). The District Court ruled, among other things,
that respondent, who claims that she had no knowledge of the origins
of the funds used to buy her house, could not invoke the "innocent
owner'' defense in 881(a)(6), which provides that "no property shall
be forfeited . . . , to the extent of the interest of an owner, by reason of
any act . . . established by that owner to have been committed . . .
without the knowledge or consent of that owner.'' The Court of
Appeals remanded on interlocutory appeal, rejecting the District
Court's reasoning that the innocent owner defense may be invoked
only by persons who are bona fide purchasers for value and by those
who acquired their property interests before the acts giving rise to
the forfeiture took place.
Held: The judgment is affirmed.
937 F. 2d 98, affirmed.
Justice Stevens, joined by Justice Blackmun, Justice
O'Connor, and Justice Souter, concluded that an owner's lack of
knowledge of the fact that her home had been purchased with the
proceeds of illegal drug transactions constitutes a defense to a
forfeiture proceeding under the statute. Pp. 5-18.
(a) The task of construing the statute must be approached with
caution. Although customs, piracy, and revenue laws have long
provided for the official seizure and forfeiture of tangible property
used in the commission of criminal activity, the statute marked an
important expansion of governmental power by authorizing the
forfeiture of proceeds from the sale of illegal goods and by creating an
express and novel protection for innocent owners. Pp. 5-10.
(b) The statute's use of the unqualified term "owner'' in three
places is sufficiently unambiguous to foreclose any contention that
the protection afforded to innocent owners is limited to bona fide
purchasers. That the funds respondent used to purchase her home
were a gift does not, therefore, disqualify her from claiming that she
is such an owner. Pp. 10-11.
(c) Contrary to the Government's contention, the statute did not
vest ownership in the United States at the moment when the
proceeds of the illegal drug transaction were used to pay the
purchase price of the property at issue, thereby preventing
respondent from ever becoming an "owner.'' Neither of the "relation
back'' doctrines relied on by the Government-the doctrine embodied
in 881(h), which provides that "[a]ll right, title and interest in
property described in subsection (a) . . . shall vest in the United
States upon commission of the act giving rise to forfeiture under this
section,'' or the common-law doctrine, under which a forfeiture decree
effectively vests title to the offending res in the Government as of the
date of the offending conduct-makes the Government an owner of
property before forfeiture has been decreed. Assuming that the
common-law doctrine applies, it is clear that the fictional and
retroactive vesting of title thereunder is not self-executing, but occurs
only when the Government wins a judgment of forfeiture. Until then,
someone else owns the property and may invoke any available
defense, including the assertion that she is an innocent owner. A
reading of 881(h) demonstrates that it did not dispense with, but
merely codified, the common-law doctrine and leads to the same
result. The legislative history reveals that 881(h) applies only to
property that is subject to civil forfeiture under 881(a). Although
proceeds traceable to illegal drug transactions are, in 881(h)'s words,
"property described in subsection'' (a)(6), the latter subsection
exempts from civil forfeiture proceeds owned by one unaware of their
criminal source and therefore must allow an assertion of the innocent
owner defense before 881(h) applies. Pp. 11-17.
(d) This Court need not resolve, inter alia, the parties' dispute as
to the point at which guilty knowledge of the tainted character of
property will deprive a party of an innocent owner defense, because
respondent has assumed the burden of convincing the trier of fact
that she had no knowledge of the alleged source of Brenna's gift when
she received it. Pp. 17-18.
Justice Scalia, joined by Justice Thomas, concluded:
1. While it is true that 881(a)(6)'s "innocent owner'' exception
produces the same result as would an "innocent owner'' exception to
traditional common-law forfeiture (with its relation-back principle),
that conclusion cannot be based upon the plurality's implausible
reading of the phrase "property described in subsection (a).'' Rather,
the result reached in this case is correct because 881(h) is best read
as an expression of the traditional relation-back doctrine, which is a
doctrine of retroactive vesting of title that takes effect only upon
entry of the judicial order of forfeiture or condemnation. Under the
alternative reading-that 881(h) provides for immediate, undecreed,
secret vesting of title in the United States at the time of the illegal
transaction-either the plain language of 881(a)(6)'s innocent-owner
provision must be slighted or the provision must be deprived of all
effect. Additionally, the traditional relation-back principle is the only
interpretation of 881(h) that makes sense within the structure of the
applicable customs forfeiture procedures, under which the
Government does not gain title until there is a forfeiture decree, and
provides the only explanation for the textual distinction between
881(a)(6)'s innocent "owner'' and 853's innocent "transferee''
provisions. Pp. 1-8.
2. There is no proper basis for the plurality's conclusion that
respondent has assumed the burden of proving that she had no
knowledge of the alleged source of Brenna's gift when she received it,
as opposed to when the illegal acts giving rise to forfeiture occurred.
The issue of what is the relevant time for purposes of determining
lack of knowledge is not fairly included in the question on which the
Court granted certiorari, and the Court need not resolve it. Pp. 8-10.
Stevens, J., announced the judgment of the Court and delivered an
opinion, in which Blackmun, O'Connor, and Souter, JJ., joined.
Scalia, J., filed an opinion concurring in the judgment, in which
Thomas, J., joined. Kennedy, J., filed a dissenting opinion, in which
Rehnquist, C. J., and White, J., joined.
Article 84 of courts.usa.federal.supreme:
Date: 24 Feb 1993 15:11:55 GMT
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D.C. 20543, of any typographical or other formal errors, in order that
corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
--------
No. 91-781
--------
UNITED STATES, PETITIONER v. A PARCEL OF
LAND, BUILDINGS, APPURTENANCES and IM-
PROVEMENTS, known as 92 BUENA VISTA
AVENUE, RUMSON, NEW JERSEY, et al.
on writ of certiorari to the united states court
of appeals for the third circuit
[February 24, 1993]
Justice Stevens announced the judgment of the Court
and delivered an opinion, in which Justice Blackmun,
Justice O'Connor, and Justice Souter join.
The question presented is whether an owner's lack of
knowledge of the fact that her home had been purchased
with the proceeds of illegal drug transactions constitutes
a defense to a forfeiture proceeding under The Compre-
hensive Drug Abuse Prevention and Control Act of 1970,
511(a), 84 Stat. 1276, as amended, 21 U. S. C.
881(a)(6).
I
On April 3, 1989, the Government filed an in rem action
against the parcel of land in Rumson, New Jersey, on
which respondent's home is located. The verified com-
plaint alleged that the property had been purchased in
1982 by respondent with funds provided by Joseph Brenna
that were -the proceeds traceable to an [unlawful] ex-
change for a controlled substance,- App. 13, and that the
property was therefore subject to seizure and forfeiture
under 881(a)(6). Id., at 15.
On April 12, 1989, in an ex parte proceeding, the
District Court determined that there was probable cause
to believe the premises were subject to forfeiture, and
issued a summons and warrant for arrest authorizing the
United States Marshal to take possession of the premises.
Respondent thereafter asserted a claim to the property,
was granted the right to defend the action, and filed a
motion for summary judgment.
During pretrial proceedings, the following facts were
established. In 1982, Joseph Brenna gave respondent
approximately $240,000 to purchase the home that she
and her three children have occupied ever since. Respon-
dent is the sole owner of the property. From 1981 until
their separation in 1987, she maintained an intimate
personal relationship with Brenna. There is probable
cause to believe that the funds used to buy the house
were proceeds of illegal drug trafficking, but respondent
swears that she had no knowledge of its origins.
Among the grounds advanced in support of her motion
for summary judgment was the claim that she was an
-innocent owner- within the meaning of 881(a)(6). The
District Court rejected this defense for two reasons: First
it ruled that -the innocent owner defense may only be
invoked by those who can demonstrate that they are bona
fide purchasers for value- (emphasis in original). Second,
the court read the statute to offer the innocent owner
defense only to persons who acquired an interest in the
property before the acts giving rise to the forfeiture took
place.
Respondent was allowed to take an interlocutory appeal
pursuant to 28 U. S. C. 1292(b). One of the controlling
questions of law presented to the Court of Appeals was:
-Whether an innocent owner defense may be assert-
ed by a person who is not a bona fide purchaser for
value concerning a parcel of land where the govern-
ment has established probable cause to believe that
the parcel of land was purchased with monies trace-
able to drug proceeds.- 742 F. Supp. 189, 192 (NJ
1990).
Answering that question in the affirmative, the Court
of Appeals remanded the case to the District Court to
determine whether respondent was, in fact, an innocent
owner. The Court of Appeals refused to limit the innocent
owner defense to bona fide purchasers for value because
the plain language of the statute contains no such limita-
tion, because it read the legislative history as indicating
that the term -owner- should be broadly construed, and
because the difference between the text of 881(a)(6) and
the text of the criminal forfeiture statute evidenced
congressional intent not to restrict the civil section in the
same way.
The Court of Appeals also rejected the argument that
respondent could not be an innocent owner unless she
acquired the property before the drug transaction occurred.
In advancing that argument the Government had relied
on the -relation back- doctrine embodied in 881(h), which
provides that -[a]ll right, title and interest in property
described in subsection (a) of this section shall vest in the
United States upon commission of the act giving rise to
forfeiture under this section.- The court held that the
relation back doctrine applied only to -property described
in subsection (a)- and that the property at issue would not
fit that description if respondent could establish her
innocent owner defense. The court concluded that the
Government's interpretation of 881(h) -would essentially
serve to emasculate the innocent owner defense provided
for in section 881(a)(6). No one obtaining property after
the occurrence of the drug transaction--including a bona
fide purchaser for value--would be eligible to offer an
innocent owner defense on his behalf.- 937 F. 2d 98, 102
(CA3 1991) at 9a.
The conflict between the decision of the Court of Ap-
peals and decisions of the Fourth and Tenth Circuits, see
In re One 1985 Nissan, 889 F. 2d 1317 (CA4 1989);
Eggleston v. Colorado, 873 F. 2d 242, 245-248 (CA10
1989), led us to grant certiorari, 503 U. S. ___ (1992). We
now affirm.
II
Laws providing for the official seizure and forfeiture of
tangible property used in criminal activity have played an
important role in the history of our country. Colonial
courts regularly exercised jurisdiction to enforce English
and local statutes authorizing the seizure of ships and
goods used in violation of customs and revenue laws.
Indeed, the misuse of the hated general warrant is often
cited as an important cause of the American Revolu-
tion.
The First Congress enacted legislation authorizing the
seizure and forfeiture of ships and cargos involved in
customs offenses. Other statutes authorized the seizure
of ships engaged in piracy. When a ship was engaged
in acts of -piratical aggression,- it was subject to confisca-
tion notwithstanding the innocence of the owner of the
vessel. Later statutes involved the seizure and forfeit-
ure of distilleries and other property used to defraud the
United States of tax revenues from the sale of alcoholic
beverages. See, e.g., United States v. Stowell, 133 U. S.
1, 11-12 (1890). In these cases, as in the piracy cases,
the innocence of the owner of premises leased to a distill-
er would not defeat a decree of condemnation based on
the fraudulent conduct of the lessee.
In all of these early cases the Government's right to
take possession of property stemmed from the misuse of
the property itself. Indeed, until our decision in Warden
v. Hayden, 387 U. S. 294 (1967), the Government had
power to seize only property that -`the private citizen was
not permitted to possess.'- The holding in that case
that the Fourth Amendment did not prohibit the seizure
of -mere evidence- marked an important expansion of
governmental power. See Zurcher v. Stanford Daily, 436
U. S. 547, 577-580 (1978) (Stevens, J., dissenting).
The decision by Congress in 1978 to amend the Compre-
hensive Drug Abuse Prevention and Control Act of 1970,
84 Stat. 1236, to authorize the seizure and forfeiture of
proceeds of illegal drug transactions, see 92 Stat. 3777,
also marked an important expansion of governmental
power. Before that amendment, the statute had autho-
rized forfeiture of only the illegal substances themselves
and the instruments by which they were manufactured
and distributed. The original forfeiture provisions of
the 1970 statute had closely paralleled the early statutes
used to enforce the customs laws, the piracy laws, and the
revenue laws: They generally authorized the forfeiture of
property used in the commission of criminal activity, and
they contained no innocent owner defense. They applied
to stolen goods, but they did not apply to proceeds from
the sale of stolen goods. Because the statute, after its
1978 amendment, does authorize the forfeiture of such
proceeds and also contains an express and novel protection
for innocent owners, we approach the task of construing
it with caution.
III
The Court of Appeals correctly concluded that the
protection afforded to innocent owners is not limited to
bona fide purchasers. The text of the statute is the
strongest support for this conclusion. The statute autho-
rizes the forfeiture of moneys exchanged for a controlled
substance, and -all proceeds traceable to such an ex-
change,- with one unequivocal exception:
-[N]o property shall be forfeited under this paragraph,
to the extent of the interest of an owner, by reason
of any act or omission established by that owner to
have been committed or omitted without the knowl-
edge or consent of that owner.- 21 U. S. C.
881(a)(6).
The term -owner- is used three times and each time it is
unqualified. Such language is sufficiently unambiguous
to foreclose any contention that it applies only to bona
fide purchasers. Presumably that explains why the
Government does not now challenge this aspect of the
Court of Appeals' ruling.
That the funds respondent used to purchase her home
were a gift does not, therefore, disqualify respondent from
claiming that she is an owner who had no knowledge of
the alleged fact that those funds were -proceeds traceable-
to illegal sales of controlled substances. Under the terms
of the statute, her status would be precisely the same if,
instead of having received a gift of $240,000 from Brenna,
she had sold him a house for that price and used the
proceeds to buy the property at issue.
IV
Although the Government does not challenge our
interpretation of the statutory term -owner-, it insists that
respondent is not the -owner- of a house she bought in
1982 and has lived in ever since. Indeed, it contends that
she never has been the owner of this parcel of land
because the statute vested ownership in the United States
at the moment when the proceeds of an illegal drug
transaction were used to pay the purchase price. In
support of its position, the Government relies on both the
text of the 1984 amendment to the statute and the
common-law relation back doctrine. We conclude, howev-
er, that neither the amendment nor the common-law rule
makes the Government an owner of property before
forfeiture has been decreed.
In analyzing the Government's relation back argument,
it is important to remember that respondent invokes the
innocent owner defense against a claim that proceeds
traceable to an illegal transaction are forfeitable. The
Government contends that the money that Brenna re-
ceived in exchange for narcotics became Government
property at the moment Brenna received it and that
respondent's house became Government property when
that tainted money was used in its purchase. Because
neither the money nor the house could have constituted
forfeitable proceeds until after an illegal transaction
occurred, the Government's submission would effectively
eliminate the innocent owner defense in almost every
imaginable case in which proceeds could be forfeited. It
seems unlikely that Congress would create a meaningless
defense. Moreover, considering that a logical application
of the Government's submission would result in the
forfeiture of property innocently acquired by persons who
had been paid with illegal proceeds for providing goods or
services to drug traffickers, the burden of persuading
us that Congress intended such an inequitable result is
especially heavy.
The Government recognizes that the 1984 amendment
did not go into effect until two years after respondent
acquired the property at issue in this case. It therefore
relies heavily on the common-law relation back doctrine
applied to in rem forfeitures. That doctrine applied the
fiction that property used in violation of law was itself the
wrongdoer that must be held to account for the harms it
had caused. Because the property, or -res-, was treated
as the wrongdoer, it was appropriate to regard it as the
actual party to the in rem forfeiture proceeding. Under
the relation back doctrine, a decree of forfeiture had the
effect of vesting title to the offending res in the Govern-
ment as of the date of its offending conduct. Because we
are not aware of any common-law precedent for treating
proceeds traceable to an unlawful exchange as a fictional
wrongdoer subject to forfeiture, it is not entirely clear that
the common-law relation back doctrine is applicable.
Assuming that the doctrine does apply, however, it is
nevertheless clear that under the common-law rule the
fictional and retroactive vesting was not self-executing.
Chief Justice Marshall explained that forfeiture does not
automatically vest title to property in the Government:
-It has been proved, that in all forfeitures accruing
at common law, nothing vests in the government until
some legal step shall be taken for the assertion of its
right, after which, for many purposes, the doctrine of
relation carries back the title to the commission of the
offence.- United States v. Grundy, 3 Cranch 337,
350-351 (1806).
The same rule applied when a statute (a statute that
contained no specific relation back provision) authorized
the forfeiture. In a passage to which the Government has
referred us, we stated our understanding of how the
Government's title to forfeited property relates back to the
moment of forfeitability:
-By the settled doctrine of this court, whenever a
statute enacts that upon the commission of a certain
act specific property used in or connected with that
act shall be forfeited, the forfeiture takes effect
immediately upon the commission of the act; the right
to the property then vests in the United States,
although their title is not perfected until judicial
condemnation; the forfeiture constitutes a statutory
transfer of the right to the United States at the time
the offence is committed; and the condemnation, when
obtained, relates back to that time, and avoids all
intermediate sales and alienations, even to purchasers
in good faith.- United States v. Stowell, 133 U. S., at
16-17 (emphases added).
If the Government wins a judgment of forfeiture under the
common-law rule-which applied to common-law forfei-
tures and to forfeitures under statutes without specific
relation back provisions-the vesting of its title in the
property relates back to the moment when the property
became forfeitable. Until the Government does win such
a judgment, however, someone else owns the property.
That person may therefore invoke any defense available
to the owner of the property before the forfeiture is
decreed.
In this case a statute allows respondent to prove that
she is an innocent owner. And, as the Chief Justice
further explained in Grundy, if a forfeiture is authorized
by statute, -the rules of the common law may be dis-
pensed with,- 7 U. S., at 351. Congress had the opportu-
nity to dispense with the common-law doctrine when it
enacted 881(h); as we read that subsection, however,
Congress merely codified the common-law rule. Because
that rule was never applied to the forfeiture of proceeds,
and because the statute now contains an innocent owner
defense, it may not be immediately clear that they lead
to the same result.
The 1984 amendment provides:
-All right, title, and interest in property described in
subsection (a) of this section shall vest in the United
States upon commission of the act giving rise to
forfeiture under this section.- 21 U. S. C. 881(h).
Because proceeds traceable to illegal drug transactions are
a species of -property described in subsection (a),- the
Government argues that this provision has the effect of
preventing such proceeds from becoming the property of
anyone other than the United States. The argument fails.
Although proceeds subject to 881(h) are -described- in
the first part of subsection (a)(6), the last clause of that
subsection exempts certain proceeds-proceeds owned by
one unaware of their criminal source-from forfeiture. As
the Senate Report on the 1984 amendment correctly
observed, the amendment applies only to -property which
is subject to civil forfeiture under section 881(a).-
Under 881(a)(6), the property of one who can satisfy the
innocent owner defense is not subject to civil forfeiture.
Because the success of any defense available under
881(a) will necessarily determine whether 881(h) applies,
881(a)(6) must allow an assertion of the defense before
881(h) applies.
Therefore, when Congress enacted this innocent owner
defense, and then specifically inserted this relation back
provision into the statute, it did not disturb the common-
law rights of either owners of forfeitable property or the
Government. The common-law rule had always allowed
owners to invoke defenses made available to them before
the Government's title vested, and after title did vest, the
common-law rule had always related that title back to the
date of the commission of the act that made the specific
property forfeitable. Our decision denies the Government
no benefits of the relation back doctrine. The Government
cannot profit from the common-law doctrine of relation
back until it has obtained a judgment of forfeiture. And
it cannot profit from the statutory version of that doctrine
in 881(h) until respondent has had the chance to invoke
and offer evidence to support the innocent owner defense
under 881(a)(6).
V
As a postscript we identify two issues that the parties
have addressed, but that need not be decided.
The Government has argued that the Court of Appeals'
construction of the statute is highly implausible because
it would enable a transferee of the proceeds of an illegal
exchange to qualify as an innocent owner if she was
unaware of the illegal transaction when it occurred but
learned about it before she accepted the forfeitable pro-
ceeds. Respondent disputes this reading of the statute
and argues that both legislative history and common sense
suggest that the transferee's lack of knowledge must be
established as of the time the proceeds at issue are
transferred. Moreover, whether or not the text of the
statute is sufficiently ambiguous to justify resort to the
legislative history, equitable doctrines may foreclose the
assertion of an innocent owner defense by a party with
guilty knowledge of the tainted character of the property.
In all events, we need not resolve this issue in this case;
respondent has assumed the burden of convincing the trier
of fact that she had no knowledge of the alleged source
of Brenna's gift in 1982, when she received it. In its
order denying respondent's motion for summary judgment,
the District Court assumed that respondent could prove
what she had alleged, as did the Court of Appeals in
allowing the interlocutory appeal from that order. We
merely decide, as did both of those courts, whether her
asserted defense was insufficient as a matter of law.
At oral argument, the Government also suggested that
the statutory reference to -all proceeds traceable to such
an exchange- is subject to a narrowing construction that
might avoid some of the harsh consequences suggested in
the various amici briefs expressing concerns about the
impact of the statute on real estate titles. See Tr. of Oral
Arg. 5-10, 19-25. If a house were received in exchange
for a quantity of illegal substances and that house were
in turn exchanged for another house, would the traceable
proceeds consist of the first house, the second house, or
both, with the Government having an election between the
two? Questions of this character are not embraced within
the issues that we granted certiorari to resolve, however,
and for that reason, see Yee v. Escondido, 503 U. S. ___,
(1992) (slip op., at 13-16), we express no opinion concern-
ing the proper construction of that statutory term.
The judgment of the Court of Appeals is affirmed.
It is so ordered.
Article 85 of courts.usa.federal.supreme:
Date: 24 Feb 1993 15:12:18 GMT
SUPREME COURT OF THE UNITED STATES
--------
No. 91-781
--------
UNITED STATES, PETITIONER v. A PARCEL OF
LAND, BUILDINGS, APPURTENANCES and IM-
PROVEMENTS, known as 92 BUENA VISTA
AVENUE, RUMSON, NEW JERSEY, et al.
on writ of certiorari to the united states court
of appeals for the third circuit
[February 24, 1993]
Justice Scalia, with whom Justice Thomas joins,
concurring in the judgment.
I am in accord with much of the plurality's reasoning,
but cannot join its opinion for two reasons. First, while
I agree that the -innocent owner- exception in this case
produces the same result as would an -innocent owner-
exception to traditional common-law forfeiture (with its
relation-back principle), I do not reach that conclusion
through the plurality's reading of the phrase -property
described in subsection (a),- see ante, at 14-16, which
seems to me implausible. Secondly, I see no proper basis
for the plurality's concluding that -respondent has
assumed the burden of convincing the trier of fact that
she had no knowledge of the alleged source of Brenna's
gift in 1982, when she received it,- ante, at 18.
I
The Government's argument in this case has rested on
the fundamental misconception that, under the common-
law relation-back doctrine, all rights and legal title to the
property pass to the United States -at the moment of
illegal use.- Brief for United States 16. Because the
Government believes that the doctrine operates at the
time of the illegal act, it finds the term -relation back- to
be -something of a misnomer.- Ibid. But the name of the
doctrine is not wrong; the Government's understanding of
it is. It is a doctrine of retroactive vesting of title that
operates only upon entry of the judicial order of forfeiture
or condemnation: -[T]he decree of condemnation when
entered relates back to the time of the commission of the
wrongful acts, and takes date from the wrongful acts and
not from the date of the sentence or decree.- Henderson's
Distilled Spirits, 14 Wall. 44, 56 (1871). -While, under
the statute in question, a judgment of forfeiture relates
back to the date of the offense as proved, that result
follows only from an effective judgment of condemnation.-
Motlow v. State ex rel. Koeln, 295 U. S. 97, 99 (1935).
The relation-back rule applies only -in cases where the
[Government's] title ha[s] been consummated by seizure,
suit, and judgment, or decree of condemnation,- Confisca-
tion Cases, 7 Wall. 454, 460 (1869), whereupon -the
doctrine of relation carries back the title to the commis-
sion of the offense,- United States v. Grundy, 3 Cranch
337, 350-351 (1806) (Marshall, C. J.) (emphasis added).
See also United States v. Stowell, 133 U. S. 1, 16-17
(1890), quoted ante, at 13-14.
Though I disagree with the Government as to the
meaning of the common-law doctrine, I agree with the
Government that the doctrine is embodied in the statute
at issue here. The plurality, if I understand it correctly,
does not say that, but merely asserts that in the present
case the consequence of applying the statutory language
is to produce the same result that an -innocent owner-
exception under the common-law rule would produce.
Title 21 U. S. C. 881(h) provides: -All right, title, and
interest in property described in subsection (a) of this
section shall vest in the United States upon commission
of the act giving rise to forfeiture under this section.-
The plurality would read the phrase -property described
in subsection (a)- as not encompassing any property that
is protected from forfeiture by the -innocent owner-
provision of 881(a)(6). It proceeds to reason that since,
therefore, the application of (a)(6) must be determined
before (h) can be fully applied, respondent must be
considered an -owner- under that provision-just as she
would have been considered an -owner- (prior to decree
of forfeiture) at common law.
I would not agree with the plurality's conclusion, even
if I agreed with the premises upon which it is based. The
fact that application of (a)(6) must be determined before
(h) can be fully applied simply does not establish that the
word -owner- in (a)(6) must be deemed to include (as it
would at common law) anyone who held title prior to the
actual decree of forfeiture. To assume that is simply to
beg the question. Besides the fact that its conclusion is
a non sequitur, the plurality's premises are mistaken. To
begin with, the innocent-owner provision in (a)(6) does not
insulate any -property described- in (a)(6) from forfeiture;
it protects only the -interest- of certain owners in any of
the described property. But even if it could be regarded
as insulating some -property described- from forfeiture,
that property would still be covered by subsection (h),
which refers to -property described,- not -property
forfeited.- In sum, I do not see how the plurality can,
solely by focusing on the phrase -property described in
subsection (a),- establish that the word -owner- in
subsection (a) includes persons holding title after the
forfeiture-producing offense.
The Government agrees with me that 881(h) -covers
all `property described in subsection (a),' including
property so described that is nonetheless exempted from
forfeiture because of the innocent owner defense.- Brief
for United States 29. That position is quite incompatible,
however, with the Government's contention that 881(h)
operates at the time of the wrongful act, since if both
were true no one would be protected under the plain
language of the innocent-owner provision. In the Govern-
ment's view, the term -owner- in 881(a)(6) refers to
individuals -who owned the seized assets before those
assets were ever tainted by involvement in drug transac-
tions.- Id., at 21. But if 881(h) operates immediately
to vest in the Government legal title to all property
described in 881(a), even that class of -owners- would be
immediately divested of their property interests and would
be at most -former owners- at the time of forfeiture
proceedings. Because of this difficulty, the Government
is forced to argue that the word -owner- in 881(a)(6)
should be interpreted to mean -former owner.- Reply
Brief for United States 5. Thus, if 881(h) operates at
the time of the illegal transaction as the Government
contends, either the plain language of the innocent-owner
provision must be slighted or the provision must be
deprived of all effect. This problem does not exist if
881(h) is read to be, not an unheard-of provision for
immediate, undecreed, secret vesting of title in the United
States, but rather an expression of the traditional
relation-back doctrine-stating when title shall vest if
forfeiture is decreed. On that hypothesis, the person
holding legal title is genuinely the -owner- at the time
(prior to the decree of forfeiture) that the court applies
881(a)(6)'s innocent-owner provision.
I acknowledge that there is some textual difficulty with
the interpretation I propose as well: 881(h) says that
title -shall vest in the United States upon commission of
the act giving rise to forfeiture,- and I am reading it to
say that title -shall vest in the United States upon
forfeiture, effective as of commission of the act giving rise
to forfeiture.- The former is certainly an imprecise way
of saying the latter. But it is, I think, an imprecision one
might expect in a legal culture familiar with retroactive
forfeiture, and less of an imprecision than any of the
other suggested interpretations require. Moreover, this
interpretation locates the imprecision within a phrase
where clear evidence of imprecision exists, since 881(h)'s
statement that -all right . . . shall vest in the United
States- flatly contradicts the statement in 881(a) that
-[t]he following shall be subject to forfeiture to the United
States.- What the United States already owns cannot be
forfeited to it.
This interpretation of 881(h) is the only one that
makes sense within the structure of the statutory forfei-
ture procedures. Subsection 881(d) provides that forfei-
tures under 881 are governed by the procedures applica-
ble to -summary and judicial forfeiture, and condemnation
of property for violation of the customs laws,- set forth in
19 U. S. C. 1602 et seq. It is clear from these proce-
dures that the Government does not gain title to the
property until there is a decree of forfeiture. Section
1604, for example, requires the Attorney General to
commence proceedings in district court where such pro-
ceedings are -necessary- -for the recovery- of a forfeiture.
See United States v. $8,850, 461 U. S. 555, 557-558, and
n. 2 (1983) (detailing circumstances requiring judicial
forfeiture proceedings). If, however, legal title to the
property actually vested in the United States at the time
of the illegal act, judicial forfeiture proceedings would
never be -necessary.- Under the customs forfeiture
procedures the United States can, in certain limited
circumstances, obtain title to property by an executive
declaration of forfeiture. The statute provides that such
an executive -declaration of forfeiture . . . shall have the
same force and effect as a final decree and order of
forfeiture in a judicial forfeiture proceeding in a district
court of the United States,- and then specifies what that
effect is: -Title shall be deemed to vest in the United
States . . . from the date of the act for which the forfei-
ture was incurred.- 19 U. S. C. 1609(b) (emphasis
added). Finally, if the Government's construction of
881(h) were correct, the statute-of-limitations provision,
19 U. S. C. 1621, would need to state that title reverts
to the former owners of the property, rather than (as it
does) simply limit the right of the United States to
institute an -action to recover- a forfeiture.
The traditional operation of the relation-back doctrine
also explains the textual difference between 881(a)(6)'s
innocent--owner- and 853's innocent--transferee- provi-
sions-a difference on which the Government relies
heavily. See Brief for United States 31-35; Reply Brief
for United States 10-11. Section 853, which provides for
forfeiture of drug-related assets in connection with crimi-
nal convictions, uses the term -transferee--not
-owner--to protect the interests of persons who acquire
property after the illegal act has occurred. The Govern-
ment contends that the reason for this variance is that
the term -owner- simply does not cover persons acquiring
interests after the illegal act. That explanation arrives
under a cloud of suspicion, since it is impossible to
imagine (and the Government was unable to suggest) why
Congress would provide greater protection for postoffense
owners (or -transferees-) in the context of criminal forfei-
tures. The real explanation, I think, is that the term
-owner- could not accurately be used in the context of
853 because third parties can assert their property
rights under that section only -[f]ollowing the entry of an
order of forfeiture.- 21 U. S. C. 853(n). See also
853(k) (prohibiting third parties from intervening to
vindicate their property interests except as provided in
subsection (n)). Thus, at the time the third-party
interests are being adjudicated, the relation-back doctrine
has already operated to carry back the title of the United
States to the time of the act giving rise to the forfeiture,
and the third parties have been divested of their property
interests. See 853(c) (codifying the relation-back
principle for criminal forfeiture). Indeed, if the court finds
that the transferee has a valid claim under the statute,
it must -amend the order of forfeiture.- 853(n)(6).
The owner/transferee distinction is found in other
provisions throughout the United States Code, and the
traditional relation-back doctrine provides the only expla-
nation for it. While Congress has provided for the
protection of -owners- in many other forfeiture statutes,
see, e.g., 15 U. S. C. 715f(a) (allowing court to order the
return of oil subject to forfeiture -to the owner thereof-);
16 U. S. C. 2409(c) (permitting the -owner- of property
seized for forfeiture to recover it, pendente lite, by posting
bond); 2439(c) (same); 18 U. S. C. 512(a) (permitting
the -owner- of motor vehicle with altered identification
number to avoid forfeiture by proving lack of knowledge),
it consistently protects -transferees- in criminal forfeiture
statutes that follow the procedure set forth in 853:
forfeiture first, claims of third parties second. See 18
U. S. C. 1467 (criminal forfeitures for obscenity); 18
U. S. C. 1963 (1988 ed. and Supp. III) (criminal RICO
forfeitures); 18 U. S. C. 2253 (1988 ed. and Supp. III)
(criminal forfeitures for sexual exploitation of children).
I think the result reached today is correct because the
relation-back principle recited in 881(h) is the familiar,
traditional one, and the term -owner- in 881(a)(6) bears
its ordinary meaning.
II
I cannot join the plurality's conclusion that respondent
has assumed the burden of proving that -she had no
knowledge of the alleged source of Brenna's gift in 1982,
when she received it.- Ante, at 18. To support this, the
plurality cites a passage from respondent's brief taking the
position that the owner's lack of knowledge of the criminal
activity should be tested -at the time of the transfer,-
Brief for Respondent 37-38. The fact of the matter is
that both parties took positions before this Court that may
be against their interests on remand. The Government
may find inconvenient its contention that -the statutory
test for innocence . . . looks to the claimant's awareness
of the illegal acts giving rise to forfeiture at the time they
occur.- Reply Brief for United States 8. Which, if either,
party will be estopped from changing position is an issue
that we should not address for two simple reasons: (1)
Neither party has yet attempted to change position. (2)
The issue is not fairly included within the question on
which the Court granted certiorari. (That question was,
-Whether a person who receives a gift of money derived
from drug trafficking and uses that money to purchase
real property is entitled to assert an `innocent owner'
defense in an action seeking civil forfeiture of the real
property.- Pet. for Cert. i. The plurality's reformulation
of the question in the first sentence of the opinion is
inexplicable.)
This question of the relevant time for purposes of
determining knowledge was not a separate issue in the
case, but arose indirectly, by way of argumentation on the
relation-back point. The Government argued that since
(as it believed) knowledge had to be measured at the time
of the illegal act, 881(h) must be interpreted to vest title
in the United States immediately, because otherwise the
statute would produce the following -untenable result-:
A subsequent owner who knew of the illegal act at the
time he acquired the property, but did not know of it at
the time the act was committed, would be entitled to the
innocent-owner defense. Brief for United States 25. That
argument can be rejected by deciding either that the
Government's view of the timing of knowledge is wrong,
or that, even if it may be right, the problem it creates is
not so severe as to compel a ruling for the Government
on the relation-back issue. (I take the latter course: I do
not find inconceivable the possibility that post-illegal-act
transferees with post-illegal-act knowledge of the earlier
illegality are provided a defense against forfeiture. The
Government would still be entitled to the property held
by the drug dealer and by close friends and relatives who
are unable to meet their burden of proof as to ignorance
of the illegal act when it occurred.) But it entirely
escapes me how the Government's argument, an argument
in principle, can be answered by simply saying that, in
the present case, respondent has committed herself to
prove that she had no knowledge of the source of the
funds at the time she received them.
For the reasons stated, I concur in the judgment.
Article 86 of courts.usa.federal.supreme:
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From: courts@usenet.ins.cwru.edu
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Subject: 91-781.ZD Dissenting
Date: 24 Feb 1993 15:12:43 GMT
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SUPREME COURT OF THE UNITED STATES
--------
No. 91-781
--------
UNITED STATES, PETITIONER v. A PARCEL OF
LAND, BUILDINGS, APPURTENANCES and IM-
PROVEMENTS, known as 92 BUENA VISTA
AVENUE, RUMSON, NEW JERSEY, et al.
on writ of certiorari to the united states court
of appeals for the third circuit
[February 24, 1993]
Justice Kennedy, with whom The Chief Justice and
Justice White join, dissenting.
Once this case left the District Court, the appellate
courts and all counsel began to grapple with the wrong
issue, one that need not be addressed. The right ques-
tion, I submit, is not whether the donee's ownership meets
the statutory test of innocence. 21 U. S. C. 881(a)(6).
Instead, the threshold and dispositive inquiry is whether
the donee had any ownership rights that required a
separate forfeiture, given that her title was defective and
subject to the Government's claim from the outset. We
must ask whether a wrongdoer holding a forfeitable asset,
property in which the United States has an undoubted
superior claim, can defeat that claim by a transfer for no
value. Under settled principles of property transfers,
trusts and commercial transactions, the answer is no. We
need not address the donee's position except to acknowl-
edge that she has whatever right the donor had, a right
which falls before the Government's superior claim. In
this case, forfeiture is determined by the title and
ownership of the asset in the hands of the donor, not the
donee. The position of respondent as the present holder
of the asset and her knowledge, or lack of knowledge,
regarding any drug offenses are, under these facts, but
abstract inquiries, unnecessary to the resolution of the
case.
I
We can begin with the state of affairs when the alleged
drug dealer held the funds he was later to transfer to
respondent. Those moneys were proceeds of unlawful
drug transactions and in the dealer's hands were, without
question, subject to forfeiture under 881(a)(6). The
dealer did not just know of the illegal acts; he performed
them. As the case is presented to us, any defense of his
based on lack of knowledge is not a possibility. As long
as the dealer held the illegal asset, it was subject to
forfeiture and to the claim of the United States, which
had a superior interest in the property.
Suppose the drug dealer with unlawful proceeds had
encountered a swindler who, knowing nothing of the
dealer's drug offenses, defrauded him of the forfeitable
property. In an action by the Government against the
property, it need not seek to forfeit any ownership interest
of the swindler. In the in rem proceeding the Government
would need to establish only the forfeitable character of
the property in the hands of the dealer and then trace the
property to the swindler who, having no higher or better
title to interpose, must yield to the Government's interest.
In this context we would not entertain an argument that
the swindler could keep the property because he had no
knowledge of the illegal drug transaction. The defect in
title arose in the hands of the first holder and was not
eliminated by the transfer procured through fraud. Thus
the only possible -interest of an owner,- 881(a)(6), that
the swindler could hold was one inferior to the interest
of the United States.
Here, of course, the holder is a donee, not a swindler,
but the result is the same. As against a claimant with
a superior right enforceable against the donor, a donee
has no defense save as might exist, say, under a statute
of limitations. The case would be different, of course, if
the donee had in turn transferred the property to a bona
fide purchaser for full consideration. The voidable title
in the asset at that point would become unassailable in
the purchaser, subject to any heightened rules of inno-
cence the Government might lawfully impose under the
forfeiture laws. But there is no bona fide purchaser here.
The matter not having been argued before us in these
terms, perhaps it is premature to say whether the control-
ling law for transferring and tracing property rights of the
United States under 881 is federal common law, see
Boyle v. United Technologies Corp., 487 U. S. 500 (1988);
Clearfield Trust Co. v. United States, 318 U. S. 363
(1943), or the law of the State governing the transfer
under normal conflict-of-law rules, which here appears to
be New Jersey. That matter could be explored on remand
if the parties thought anything turned upon it, though the
result likely would be the same under either source of law
because the controlling principles are so well settled.
The controlling principles are established by the law of
voidable title, a centuries-old concept now codified in 49
States as part of their adoption of the Uniform Commer-
cial Code. 1 J. White & R. Summers, Uniform Commer-
cial Code 1, 186-191 (3d ed. 1988). These principles
should control the inquiry into whether property once
-subject to forfeiture to the United States,- 881(a),
remains so after subsequent transactions. Cf. R. Brown,
Personal Property 70, pp. 237-238 (2d ed. 1955); Restate-
ment (Second) of Trusts 284, 287, 289, pp. 47-48, 54-56
(1959); Restatement (Second) of Property 34.9, p. 338
(1992). The primary rules of voidable title are manage-
able and few in number. The first is that one who
purchases property in good faith and for value from the
holder of voidable title obtains good title. The second
rule, reciprocal to the first, is that one who acquires
property from a holder of voidable title other than by a
good faith purchase for value obtains nothing beyond what
the transferor held. The third rule is that a transferee
who acquires property from a good faith purchaser for
value or one of his lawful successors obtains good title,
even if the transferee did not pay value or act in good
faith. See Ames, Purchase for Value Without Notice, 1
Harv. L. Rev. 1 (1887); Uniform Commercial Code 2-403-
(1) (Official Draft 1978); Uniform Commercial Code
2-403(1) (Official Draft 1957); Uniform Commercial Code
2-403(1) (Official Draft 1952). See also 4 A. Scott & W.
Fratcher, Law of Trusts 284-289, pp. 35-70 (4th ed.
1989); Searey, Purchase for Value Without Notice, 23 Yale
L. J. 447 (1914).
Applying these rules to a transferee of proceeds from a
drug sale, it follows that the transferee must be, or take
from, a bona fide purchaser for value to assert an inno-
cent owner defense under 881(a)(6). Bona fide purchas-
ers for value or their lawful successors, having engaged
in or benefited from a transaction that the law accepts as
capable of creating property rights instead of merely
transferring possession, are entitled to test their claim of
ownership under 881(a)(6) against what the Government
alleges to be its own superior right. The outcome, that
one who had defective title can create good title in the
new holder by transfer for value, is not to be condemned
as some bizarre surprise. This is not alchemy. It is the
common law. See Independent Coal & Coke Co. v. United
States, 274 U. S. 640, 647 (1927); United States v. Chase
National Bank, 252 U. S. 485, 494 (1920); Wright-Blodgett
Co. v. United States, 236 U. S. 397, 403 (1915). By con-
trast, the donee of drug trafficking proceeds has no valid
claim to the proceeds, not because she has done anything
wrong but because she stands in the shoes of one who
has. It is the nature of the donor's interest, which the
donee has assumed, that renders the property subject to
forfeiture. Cf. Otis v. Otis, 167 Mass. 245, 246 (1897)
(Holmes, J.) (-A person to whose hands a trust fund
comes by conveyance from the original trustee is charge-
able as a trustee in his turn, if he takes it without
consideration, whether he has notice of the trust or not.
This has been settled for three hundred years, since the
time of uses-).
When the Government seeks forfeiture of an asset in
the hands of a donee, its forfeiture claim rests on defects
in the title of the asset in the hands of the donor. The
transferee has no ownership superior to the transferor's
which must be forfeited, so her knowledge of the drug
transaction, or lack thereof, is quite irrelevant, as are the
arcane questions concerning the textual application of
881(a) to someone in a donee's position. The so-called
innocent owner provisions of 881(a)(6) have ample scope
in other instances, say where a holder who once had valid
ownership in property is alleged to have consented to its
use to facilitate a drug transaction. Furthermore, whether
respondent's marital rights were present value or an ante-
cedent debt and whether either could provide the neces-
sary consideration for a bona fide purchase are questions
that could be explored on remand, were my theory of the
case to control.
II
As my opening premise is so different from the one the
plurality adopts, I do not address the difficult, and quite
unnecessary, puzzles encountered in its opinion and in the
concurring opinion of Justice Scalia. It is my obligation
to say, however, that the plurality's opinion leaves the for-
feiture scheme that is the centerpiece of the Nation's drug
enforcement laws in quite a mess.
The practical difficulties created by the plurality's inter-
pretation of 881 are immense, and we should not assume
Congress intended such results when it enacted 881(a)(6).
To start, the plurality's interpretation of 881(a)(6) con-
flicts with the principal purpose we have identified for
forfeiture under the Continuing Criminal Enterprise Act,
which is -the desire to lessen the economic power of . . .
drug enterprises.- Caplin & Drysdale v. United States,
491 U. S. 617, 630 (1989). When a criminal transfers
drug transaction proceeds to a good faith purchaser for
value, one would presume he does so because he considers
what he receives from the purchaser to be of equal or
greater value than what he gives to the purchaser, or
because he is attempting to launder the proceeds by
exchanging them for other property of near equal value.
In either case, the criminal's economic power is diminished
by seizing from him whatever he received in the exchange
with the good faith purchaser. On the other hand, when
a criminal transfers drug transaction proceeds to another
without receiving value in return, he does so, it is safe to
assume, either to use his new-found, albeit illegal, wealth
to benefit an associate or to shelter the proceeds from
forfeiture, to be reacquired once he is clear from law
enforcement authorities. In these cases, the criminal's
economic power cannot be diminished by seizing what he
received in the donative exchange, for he received no
tangible value. If the Government is to drain the
criminal's economic power, it must be able to pierce
donative transfers and recapture the property given in the
exchange. It is serious and surprising that the plurality
today denies the Government the right to pursue the same
ownership claims that under traditional and well-settled
principles any other claimant or trust beneficiary or right-
ful owner could assert against a possessor who took for
no value and who has no title or interest greater than
that of the transferor.
Another oddity now given to us by the plurality's inter-
pretation is that a gratuitous transferee must forfeit the
proceeds of a drug deal if she knew of the drug deal
before she received the proceeds but not if she discovered
it a moment after. Yet in the latter instance, the donee,
having given no value, is in no different position from the
donee who had knowledge all along, save perhaps that she
might have had a brief expectation the gift was clean. By
contrast, the good faith purchaser for value who, after an
exchange of assets, finds out about his trading partner's
illegal conduct has undergone a significant change in cir-
cumstances: He has paid fair value for those proceeds in
a transaction which, as a practical matter in most cases,
he cannot reverse.
III
The statutory puzzle the plurality and concurrence find
so engaging is created because of a false premise, the
premise that the possessor of an asset subject to forfeiture
does not stand in the position of the transferor but must
be charged with some guilty knowledge of her own.
Forfeiture proceedings, though, are directed at an asset,
and a donee in general has no more than the ownership
rights of the donor. By denying this simple principle, the
plurality rips out the most effective enforcement provisions
in all of the drug forfeiture laws. I would reverse the
judgment of the Court of Appeals, and with all due
respect, I dissent from the judgment of the Court.