United States v. Parcel of Rumson, NJ, Land
United States v. Parcel of Rumson, NJ, Land
Opinion of the Court
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 Comprehensive 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 complaint 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] exchange for a controlled substance,” App. 13, and that the property was therefore subject to seizure and forfeiture under § 881(a)(6), id., at 15.
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. Respondent 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.
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 asserted by a person who is not a bona fide purchaser for value concerning a parcel of land where the government has established probable cause to believe that the parcel of land was purchased with monies traceable 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 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 ob-
The conflict between the decision of the Court of Appeals 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. 905 (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.
The First Congress enacted legislation authorizing the seizure and forfeiture of ships and cargos involved in customs offenses.
The decision by Congress in 1978 to amend the Comprehensive 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.
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 authorizes the forfeiture of moneys exchanged for a controlled substance, and “all proceeds traceable to such an exchange,” 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 knowledge 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
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 received 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,
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).20
“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*127 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 forfeitures 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 forfeit-able. 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 dispensed with,” 3 Cranch, at 351. Congress had the opportunity 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.
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 proceeds. 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.
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 char
The judgment of the Court of Appeals is affirmed.
It is so ordered.
The statute provides:
“The following shall be subject to forfeiture to the United States and no property right shall exist in them:
“(6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of [21 U. S. C. §§ 801-904], all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter, except that no 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 knowledge or consent of that owner.”
See n. 1, supra. The complaint also alleged that the property had been used in 1986 to facilitate the distribution of proceeds of an illegal
“The following shall be subject to forfeiture to the United States and no property right shall exist in them:
“(7) All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year’s imprisonment, except that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.”
No issue concerning the Government’s claim under subparagraph (7) is presented before us.
The United States Marshals Service entered into an agreement with respondent that allows her to remain in possession of the property pending the outcome of the litigation.
“I find that the claimant cannot successfully invoke the ‘innocent owner’ defense here, because she admits that she received the proceeds to purchase the premises as a gift from Mr. Brenna. More particularly, I find that where, as here, the government has demonstrated probable cause to believe that property is traceable to proceeds from drug transactions, the innocent owner defense may only be invoked by those who can demonstrate that they are bona fide purchasers for value.” 738 F. Supp. 864, 860 (NJ 1990).
“In particular, the ‘innocent owner defense’ at issue provides that ‘no property shall be forfeited ... to the extent of the interest of an owner, by reason of any act or omission . . . committed or omitted without the knowledge or consent of that owner.’ 21 U. S. C. §881(a)(6) (emphasis supplied). This language implies that the acts or omissions giving rise to forfeiture must be committed after the third party acquires a legitimate ownership interest in the property.” Ibid, (emphasis in original).
“Despite the appeal of this analysis, the plain language of the innocent owner provision speaks only in terms of an ‘owner’ and in no way limits the term ‘owner’ to a bona fide purchaser for value.” 937 F. 2d 98, 101 (CA3 1991).
“Furthermore, in United States v. Parcel of Real Property Known as 6109 Grubb Road, 886 F. 2d 618 (3d Cir. 1989), we determined, after reviewing the legislative history of section 881(a)(6), that ‘the term “owner” should be broadly interpreted to include any person with a recognizable legal or equitable interest in the property seized.’ Id. at 625 n. 4 (quoting 1978 U. S. Code Cong. & Admin. News at 9522-23).” Id., at 101-102.
“Moreover, as the district court pointed out, the criminal forfeiture statute, section 853, is explicitly limited to bona fide purchasers for value, while in section 881 Congress omitted such limiting language. We believe that such a difference was intended by Congress.” Ibid.
“Long before the adoption of the Constitution the common law courts in the Colonies — and later in the states during the period of Confederation — were exercising jurisdiction in rem in the enforcement of forfeiture statutes. Like the Exchequer, in cases of seizure on navigable waters they exercised a jurisdiction concurrently with the courts of admiralty. But the vice-admiralty courts in the Colonies did not begin to function with any real continuity until about 1700 or shortly afterward. See Andrews, Vice-Admiralty Courts in the Colonies, in Records of the Vice-Admiralty Court of Rhode Island, 1617-1752 (ed. Towle, 1936), p. 1; Andrews, The Colonial Period of American History, vol. 4, ch. 8; Harper, The English Navigation. Laws, ch. 15; Osgood, the American Colonies in the 18th Century, vol. 1, pp. 185-222, 299-303. By that time, the jurisdiction of common law courts to condemn ships and cargoes for violation of the Navigation Acts had been firmly established, apparently without question, and was regularly exercised throughout the colonies. In general the suits were brought against the vessel or article to be condemned, were tried by jury, closely followed the procedure in Exchequer, and if successful resulted in judgments of forfeiture or condemnation with a provision for
Writing for the Court in Stanford v. Texas, 379 U. S. 476, 481-482 (1965), Justice Stewart explained: “Vivid in the memory of the newly independent Americans were those general warrants known as writs of assistance under which officers of the Crown had so bedeviled the colonists. The hated writs of assistance had given customs officials blanket authority to search where they pleased for goods imported in violation of the British tax laws. They were denounced by James Otis as ‘the worst instrument of arbitrary power, the most destructive of English liberty, and the fundamental principles of law, that ever was found in an English law book,’ because they placed ‘the liberty of every man in the hands of every petty officer.’ The historic occasion of that denunciation, in 1761 at Boston, has been characterized as ‘perhaps the most prominent event which inaugurated the resistance of the colonies to the oppressions of the mother country. “Then and there,” said John Adams, “then and there was the first scene of the first act of opposition to the arbitrary claims of Great Britain. Then and there the child Independence was born.’” Boyd v. United States, 116 U. S. 616, 625.”
See, e. g., §§12, 36, 1 Stat. 39, 47; §§13, 14, 22, 27, 67, 1 Stat. 157-159, 161, 163-164, 176.
See The Palmyra, 12 Wheat. 1, 8 (1827).
“The next question is, whether the innocence of the owners can withdraw the ship from the penalty of confiscation under the act of Congress. Here, again, it may be remarked that the act makes no exception whatsoever, whether the aggression be with or without the co-operation of the owners. 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. The vessel or boat (says the act of Congress) from which such piratical aggression, &c., shall have been first attempted or made shall be
“Beyond controversy, the title of the premises and property was in the claimant; and it is equally certain that he leased the same to the lessee for the purposes of a distillery, and with the knowledge that the lessee intended to use the premises to carry on that business, and that he did use the same for that purpose.
“Fraud is not imputed to the owner of the premises; but the evidence and the verdict of the jury warrant the conclusion that the frauds charged in the information were satisfactorily proved, from which it follows that the decree of condemnation is correct, if it be true, as heretofore explained, that it was the property and not the claimant that was put to trial under the pleadings; and we are also of the opinion that the theory adopted by the court below, that, if the lessee of the premises and the operator of the distillery committed the alleged frauds, the government was entitled to a verdict, even though the jury were of the opinion that the claimant was ignorant of the fraudulent acts or omissions of the distiller.” Dobbins’s Distillery v. United States, 96 U. S. 395, 403-404 (1878).
“Thus stolen property — the fruits of crime — was always subject to seizure. And the power to search for stolen property was gradually extended to cover ‘any property which the private citizen was not permitted to possess,’ which included instrumentalities of crime (because of the early notion that items used in crime were forfeited to the State) and contraband. Kaplan, Search and Seizure: A No-Man’s Land in the Criminal Law, 49 Calif. L. Rev. 474, 475. No separate governmental interest in seizing evidence to apprehend and convict criminals was recognized; it was required that some property interest be asserted. The remedial structure also reflected these dual premises. Trespass, replevin, and the other means of redress for persons aggrieved by searches and seizures, depended upon proof of a superior property interest. And since a lawful seizure presupposed a superior claim, it was inconceivable that a person could recover property lawfully seized.” Warden v. Hayden, 387 U. S., at 303-304.
A precedent for this expansion had been established in 1970 by the Racketeer Influenced and Corrupt Organizations Act (RICO), see 18 U. S. C. § 1963(a). Even RICO, however, did not specifically provide for the forfeiture of “proceeds” until 1984, when Congress added § 1963(a)(3) to resolve any doubt whether it intended the statute to reach so far. See S. Rep. No. 98-225, pp. 191-200 (1983); Russello v. United States, 464 U. S. 16 (1983).
Section 511(a) of the 1970 Act, 84 Stat. 1276, provided:
“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 acquired in violation of this title.
“(2) All raw materials, products, and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing, or exporting any controlled substance in violation of this title.
“(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, vehicles, or vessels, which are used, or are intended 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 title or title III; and
“(B) no conveyance shall be forfeited under the provisions of this section by reason of any act or omission established by the owner thereof to have been committed or omitted by any person other than such owner while such conveyance was unlawfully in the possession of a person other than the owner in violation of the criminal laws of the United States, or of any State.
“(5) All books, records, and research, including formulas, microfilm, tapes, and data which are used, or intended for use, in violation of this title.”
At oral argument the Government suggested that a narrow interpretation of the word “proceeds” would “probably” prevent this absurdity. See Tr. of Oral Arg. 27. The Government’s brief, however, took the unequivocal position that the statute withholds the innocent owner defense from anyone who acquires proceeds after the illegal transaction took place. See Brief for United States 10, 21, 25, 27.
See Calero-Toledo v. Pearson Yacht Leasing Co., 416 U. S. 663, 680-684 (1974).
In his dissent, Justice Kennedy advocates the adoption of a new common-law rule that would avoid the need to construe the terms of the statute that created the Government’s right to forfeit proceeds of drug transactions. Under his suggested self-executing rule, patterned after an amalgam of the law of trusts and the law of secured transactions, the Government would be treated as the owner of a secured or beneficial interest in forfeitable proceeds even before a decree of forfeiture is entéred. The various authorities that he cites support the proposition that if such
Justice Kennedy’s dramatic suggestion that our construction of the 1984 amendment “rips out,” post, at 145, the “centerpiece of the Nation’s drug enforcement laws,” post, at 144, rests on what he characterizes as the “safe” assumption that the innocent owner defense would be available to “an associate” of a criminal who could “shelter the proceeds from forfeiture, to be reacquired once he is clear from law enforcement authorities,” ibid. As a matter of fact, forfeitable proceeds are much more likely to be possessed by drug dealers themselves than by transferees sufficiently remote to qualify as innocent owners; as a matter of law, it is quite clear that neither an “associate” in the criminal enterprise nor a temporary custodian of drug proceeds would qualify as an innocent owner; indeed, neither would a sham bona fide purchaser.
See Pet. for Cert. 9-10; Brief for United States 17.
The Report provides:
“Section 306 also adds two new subsections at the end of section 881. The first provides that all right, title, and interest in property which is subject to civil forfeiture under section 881(a) vests in the United States upon the commission of the acts giving rise to the forfeiture.” S. Rep. No. 98-226, p. 215 (1983) (emphasis added).
The logic of the Government’s argument would apparently apply as well to the innocent owner defense added to the statute in 1988. That amendment provides, in part:
“[N]o conveyance shall be forfeited under this paragraph to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge, consent, or willful blindness of the owner.” §6075(3)(C), 102 Stat. 4324. That amendment presumably was enacted to protect lessors like the owner whose yacht was forfeited in a proceeding that led this Court to observe: “It therefore has been implied that it would be difficult to reject the constitutional claim of an owner whose property subjected to forfeiture had been taken from him without his privity or consent. See, [Peisch v. Ware, 4 Cranch 347, 364 (1808)]; Goldsmith-Grant Co. v. United States, 254 U. S., at 512; United States v. One Ford Coupe Automobile, 272 U. S., at 333; Van Oster v. Kansas, 272 U. S., at 467. Similarly, the same might be said of an owner who proved not only that he was uninvolved in and unaware of the wrongful activity, but also that he had done all that reasonably could be expected to prevent the proscribed use of his property; for, in that circumstance, it would be difficult to conclude that forfeiture served legitimate purposes and was not unduly oppressive. Cf. Armstrong v.*129 United States, 364 U. S. 40, 49 (I960).” Calero-Toledo v. Pearson Yacht Leasing Co., 416 U. S., at 689-690 (footnote omitted).
See Brief for Respondent 31-32, 37-38; Tr. of Oral Arg. 38. The several amici make the same point, see Brief for American Bankers Association as Amicus Curiae 15; Brief for Federal Home Loan Mortgage Corpo
“The statute should be read to require that the owner assert his lack of knowledge of the criminal transaction at the time of the transfer. Since Goodwin did not have any knowledge of the alleged criminal transaction until long after the transfer, she should be protected by the innocent owner clause.” Brief for Respondent 37-38.
If she can show that she was unaware of the illegal source of the funds at the time Brenna transferred them to her, then she was necessarily unaware that they were the profits of an illegal transaction at the time of the transaction itself.
Concurring Opinion
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 127-129, which seems to me implausible. Second, 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 130.
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: “[Tlhe decree of condemnation when entered relates back to
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 subsection (a)(6) must be determined before subsection (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.
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 Government’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 transactions.” 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
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 forfeiture procedures. Subsection 881(d) provides that forfeitures under
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” provisions — 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 criminal convictions, uses the term “transferee” — not “owner” — to protect the interests of persons who acquire property after the illegal act has occurred.
The owner/transferee distinction is found in other provisions throughout the United States Code, and the traditional relation-back doctrine provides the only explanation 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).
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 130. 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 prop
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.
In the proceedings below, the Government argued that § 1621 was the relevant statute of limitations for § 881 and the Court of Appeals agreed. See Brief for United States, Plaintiff-Appellee in No. 90-5823 (CA3), pp. 19-23; App. to Pet. for Cert. 14a-15a. That ruling was not appealed and is consistent with other authority. See United States v. One Parcel of Real Property, 2401 S. Claremont, Independence, Mo., 724 F. Supp. 670, 673 (WD Mo. 1989). See also United States v. $8,850, 461 U. S. 555, 563, n. 13 (1983) (forfeiture statute not specifying procedures to be used held to incorporate statute of limitations in § 1621),
Section 881(d) provides that the customs procedures are applicable only to the extent “not inconsistent with the provisions [of §881]” — so one might argue that the provisions I have discussed in this paragraph, to the extent contrary to the Government’s interpretation of § 881(h), are simply inapplicable. That disposition is theoretically possible but not likely, since it produces massive displacement of not merely the details but the fundamental structure of the referenced forfeiture procedures.
Title 21 U. S. C. § 853(c) provides:
“All right, title, and interest in property described in subsection (a) of this section vests in the United States upon the commission of the act giving rise to forfeiture under this section. Any such property that is subsequently transferred to a person other than the defendant may be the subject of a special verdict of forfeiture and thereafter shall be ordered forfeited to the United States, unless the transferee establishes in a hearing pursuant to subsection (n) of this section that he is a bona fide purchaser for value of such property who at the time of purchase was reasonably without cause to believe that the property was subject to forfeiture under this section.”
It is worth observing that, if the Government’s view of the relation-back principle were correct, the protection provided for transferees in the last-mentioned statute would be utterly illusory. The property subject to forfeiture under 18 U. S. C. § 2253 (1988 ed. and Supp. Ill) is also covered by a parallel civil forfeiture statute that follows the pattern of §881: It
Dissenting Opinion
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
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
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 innocence 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 controlling 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 any
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 Commercial Code. 1 J. White & R. Summers, Uniform Commercial 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); Restatement (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 manageable 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 innocent owner defense under § 881(a)(6). Bona fide purchasers for value or their lawful successors, having engaged in or bene
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 antecedent debt and whether either could provide the necessary consideration for a bona fide pur
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 opinion of Justice Scalia, concurring in the judgment. It is my obligation to say, however, that the plurality’s 'opinion leaves the forfeiture scheme that is the centerpiece of the Nation’s drug enforcement laws in quite a mess.
The practical difficulties created by the plurality’s interpretation 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) conflicts 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, Chartered 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 tan
Another oddity now given to us by the plurality’s interpretation 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 circumstances: He has paid fair value for those proceeds in a transaction which, as a practical matter in most cases, he cannot reverse.
1 — 1 1 — 4 H-t
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.
Reference
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- UNITED STATES v. a PARCEL OF LAND, BUILDINGS, APPURTENANCES, AND IMPROVEMENTS, KNOWN AS 92 BUENA VISTA AVENUE, RUMSON, NEW JERSEY, Et Al.
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