United States v. United States Coin & Currency/Opinion of the Court

by John Marshall Harlan II

United States Supreme Court

401 U.S. 715

United States  v.  United States Coin & Currency

 Argued: Feb. 25-26, 1969. --- Decided: Oct 20, 1970

After Donald J. Angelini had been convicted of failing to register as a gambler and to pay the related gambling tax required by federal law, 26 U.S.C. §§ 4411, 4412, 4901, the United States instituted the forfeiture proceeding to obtain $8,674 which Angelini had in his possession at the time of his arrest. The District Court for the Northern District of Illinois found that the money was being used in a bookmaking operation in violation of these internal revenue laws and ordered forfeiture under 26 U.S.C. § 7302 which provides:

'It shall be unlawful to have or possess any property intended for use in violating the provisions of the internal revenue laws * * * and no property rights shall exist in any such property. * * *'

When the Court of Appeals affirmed, we granted certiorari, sub nom. Angelini v. United States, 390 U.S. 204, 88 S.Ct. 899, 19 L.Ed.2d 1035, and remanded the case for further consideration in the light of our decisions in Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968), and Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968), which precluded the criminal conviction of gamblers who properly assert their privilege against self-incrimination as a ground for their failure to comply with these aspects of the gambling tax law. A unanimous panel of the Court of Appeals concluded that Angelini might properly assert his Fifth Amendment privilege in this forfeiture proceeding and ordered the return of the seized money. United States v. United States Coin & Currency in Amount of $8,674.00, 393 F.2d 499 (7 Cir., 1968). Since the Court of Appeals for the Sixth Circuit subsequently came to the opposite conclusion, ^[1] we granted the Government's petition for certiorari in the present case, 393 U.S. 949, 89 S.Ct. 375, 21 L.Ed.2d 361 (1968), in order to resolve the conflict. The case was first argued at the 1968 Term and reargued at the current Term. We now affirm the decision below.

* The Government's principal argument turns upon an exceedingly narrow construction of our decisions in Marchetti and Grosso. In those cases, we took pains to make it clear that the Court in no way doubted the Government's power to assess and collect taxes on unlawful gambling activities. It was only the method Congress had adopted in collecting the tax that raised the Fifth Amendment question. The statute commanded that gamblers submit special registration statements and tax returns that contained information which could well incriminate them in many circumstances. Because the risk of self-incrimination was substantial, we held that a Fifth Amendment privilege could be raised as a defense to a criminal prosecution charging failure to file the required forms. Since it was only this method of tax collection which was subject to constitutional objection, we indicated that the Government remained free to collect taxes due under the statute so long as it did not attempt to punish the taxpayer for his failure to file the require documents.

The Government now relies heavily on the fact that Marchetti and Grosso only held that 'a claim of privilege precludes a criminal conviction premised on failure to pay the tax.' ^[2] (Emphasis supplied.) It argues that just as it may collect taxes in a civil action, the Government may also initiate forfeiture proceedings-which are also formally civil in nature-without offending Marchetti and Grosso. But as Boyd v. United States, 116 U.S. 616, 634, 68 S.Ct. 524, 534, 29 L.Ed. 746 (1886), makes clear, 'proceedings instituted for the purpose of declaring the forfeiture of a man's property by reason of offences committed by him, though they may be civil in form, are in their nature criminal' for Fifth Amendment purposes. (Emphasis supplied.) From the relevant constitutional standpoint there is no difference between a man who 'forfeits' $8,674 because he has used the money in illegal gambling activities and a man who pays a 'criminal fine' of $8,674 as a result of the same course of conduct. In both instances, money liability is predicated upon a finding of the owner's wrongful conduct; in both cases, the Fifth Amendment applies with equal force. See also One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 700, 85 S.Ct. 1246, 1250, 14 L.Ed.2d 170 (1965).

The Government does not seriously contend otherwise. Instead it places great emphasis on the peculiar nature of the proceedings authorized under § 7302. Boyd, we are told, was only concerned with forfeitures which are imposed 'by reason of offences committed by' the owner. 116 U.S., at 634, 6 S.Ct., at 534. In the present action, however, the Government contends that the guilt of the owner of the money is irrelevant. The forfeiture statute, it is noted, simply authorizes confiscation of 'any property intended for use in violating the provisions of the internal revenue laws'; it does not require that Angelini be the one who possessed the requisite intention. If, for example, Angelini had left the money in a bookmaker's office without having any reason to know that illegal activities would take place there, the Government reads the statute as permitting confiscation if it can be shown that the bookmaker used Angelini's money in illegal wagering activities. Since, under the Government's view, the guilt or innocence of the actual owner of the money is irrelevant in an action under § 7302, the Government urges that the present forfeiture should not be considered the result of a 'criminal' proceeding for Fifth Amendment purposes.

If we were writing on a clean slate, this claim that § 7302 operates to deprive totally innocent people of their property would hardly be compelling. Although it is true that the statute does not specifically state that the property shall be seized only if its owner significantly participated in the criminal enterprise, we would not readily infer that Congress intended a different meaning. Cf. Morissette v. United States, 342 U.S. 246, 72 S.Ct. 240, 96 L.Ed. 288 (1952). However, as our past decisions have recognized, centuries of history support the Government's claim that forfeiture statutes similar to this one have an extraordinarily broad scope. See Goldsmith Jr.-Grant Co. v. United States, 254 U.S. 505, 41 S.Ct. 189, 65 L.Ed. 376 (1921); United States v. One Ford Coupe, 272 U.S. 321, 47 S.Ct. 154, 71 L.Ed. 279 (1926). Traditionally, forfeiture actions have proceeded upon the fiction that inanimate objects themselves can be guilty of wrongdoing. See Dobbins's Distillery v. United States, 96 U.S. 395, 399-401, 24 L.Ed. 637 (1878); The Palmyra, 12 Wheat. 1, 14, 6 L.Ed. 531 (1827). Simply put, the theory has been that if the object is 'guilty,' it should be held forfeit. In the words of a medieval English writer, 'Where a man killeth another with the sword of John at Stile, the sword shall be forfeit as deodand, and yet no default is in the owner.' ^[3] The modern forfeiture statutes are the direct descendants of this heritage, which is searchingly considered by Mr. Justice Holmes in a brilliant chapter in his book, The Common Law. ^[4] The forfeiture action in the present case was instituted as an in rem proceeding in which the money itself is the formal respondent. More remarkable, the Government's complaint charges the money with the commission of an actionable wrong. ^[5]

It would appear then that history does support the Government's contention regarding the operation of this forfeiture statute, as do several decisions rendered by the courts of appeals. ^[6] But before the Government's attempt to distinguish the Boyd case could even begin to convince, we would first have to be satisfied that a forfeiture statute, with such a broad sweep, did not raise serious constitutional questions under that portion of the Fifth Amendment which commands that no person shall be 'deprived of * * * property, without due process of law; nor shall private property be taken for public use, without just compensation.' Even Blackstone, who is not known as a biting critic of the English legal tradition, condemned the seizure of the property of the innocent as based upon a 'superstition' inherited from the 'blind days' of feudalism. ^[7] And this Court in the past has recognized the difficulty of reconciling the broad scope of traditional forfeiture doctrine with the requirements of the Fifth Amendment. See, e.g., Goldsmith Jr.-Grant Co. v. United States, supra. Cf. United States v. One 1936 Model Ford V-8 DeLuxe Coach, 307 U.S. 219, 236-237, 59 S.Ct. 861, 869-870, 86 L.Ed. 1249 (1939).

We need not pursue that inquiry once again, however, because we think that the Government's argument fails on another score. For the broad language of § 7302 cannot be understood without considering the terms of the other statutes which regulate forfeiture proceedings. An express statutory provision permits the innocent owner to prove to the Secretary of the Treasury that the 'forfeiture was incurred without willful negligence or without any intention on the part of the petitioner * * * to violate the law * * *.' 19 U.S.C. § 1618. ^[8] Upon this showing, the Secretary is authorized to return the seized property 'upon such terms and conditions as he deems reasonable and just.' It is not to be presumed that the Secretary will not conscientiously fulfill this trust, and the courts have intervened when the innocent petitioner's protests have gone unheeded. United States v. Edwards, 368 F.2d 722 (CA4 1966); Cotonificio Bustese, S.A. v. Morgenthau, 74 App.D.C. 13, 121 F.2d 884 (1941) (Rutledge, J.). When the forfeiture statutes are viewed in their entirety, it is manifest that they are intended to impose a penalty only upon those who are significantly involved in a criminal enterprise. ^[9] It follows from Boyd, Marchetti, and Grosso that the Fifth Amendment's privilege may properly be invoked in these proceedings. ^[10]

The Government next contends that in any event our decisions in Marchetti and Grosso should not be retroactively applied to govern seizures of property taking place before these decisions were handed down on January 29, 1968. It is said that in reliance on the Court's earlier decisions in Kahriger and Lewis, ^[11] which upheld the validity of the gambling tax and registration requirements, '$6,686,098.22 worth of money and property has been seized under 26 U.S.C. 7302.' Brief for the United States 32-33. The Solicitor General concedes, however, that this figure overestimates the Government's stake in the retroactivity question since 'there are no reliable statistics indicating what percentage (of the property seized) was eventually returned to claimants' who rpoved to the Secretary of the Treasury that they were not significantly involved in criminal gambling activities. Id., at 33. Nevertheless, the Government contends that simply because some litigation may be anticipated as gamblers attempt to reclaim their property, the retroactive effect of the new rule should be limited.

We cannot agree. Unlike some of our earlier retroactivity decisions, we are not here concerned with the implementation of a procedural rule which does not undermine the basic accuracy of the factfinding process at trial. Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965); Tehan v. United States ex rel. Shott, 382 U.S. 406, 86 S.Ct. 459, 15 L.Ed.2d 453 (1966); Johnson v. New Jersey, 384 U.S. 719, 86 S.Ct. 1772, 16 L.Ed.2d 882 (1966); Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967). Rather, Marchetti and Grosso dealt with the kind of conduct that cannot constitutionally be punished in the first instance. These cases held that gamblers in Angelini's position had the Fifth Amendment right to remain silent in the face of the statute's command that they submit reports which could incriminate them. In the absence of a waiver of that right, such persons could not properly be prosecuted at all.

Given the aim of the Marchetti-Grosso rule, it seems clear that the Government must be required to undergo the relatively insignificant inconvenience involved in defending any lawsuits that may be anticipated. Indeed, this conclusion follows a fortiori from those decisions mandating the retroactive application of those new rules which substantially improve the accuracy of the factfinding process at trial. ^[12] In those cases, retroactivity was held required because the failure to employ such rules at trial meant there was a significant chance that innocent men had been wrongfully punished in the past. In the case before us, however, even the use of impeccable factfinding procedures could not legitimate a verdict decreeing forfeiture, for we have held that the conduct being penalized is constitutionally immune from punishment. No circumstances call more for the invocation of a rule of complete retroactivity. ^[13]

Affirmed.

Notes

1. United States v. One 1965 Buick, 392 F.2d 672, rehearing denied, 397 F.2d 782.
2. Grosso v. United States, 390 U.S., at 70, n. 7, 88 S.Ct., at 714; see also Marchetti v. United States, 390 U.S., at 41-42, 61, 88 S.Ct., at 698-700, 709.
3. Quoted from O. Holmes, The Common Law 23 (M. Howe ed. 1963).
4. Holmes, supra, n. 3, Lecture 1.
5. The libel charged that: 'On one or more of the aforementioned dates * * * aforesaid respondents (i.e., the money) had been used and were intended to be used in violation of the Internal Revenue Laws of the United States of America. * * * WHEREFORE FRANK E. McDONALD, United States Attorney for the Northern District of Illinois * * * prays * * * That aforesaid respondents be adjudged and decreed forfeited to the UNITED STATES OF AMERICA.' App. 5-6.
6. United States v. Bride, 308 F.2d 470 (CA9 1962); United States v. One 1958 Pontiac Coupe, 298 F.2d 421 (CA7 1962); cf. United States v. One 1957 Oldsmobile Automobile, 256 F.2d 931 (CA5 1958).
7. 1 W. Blackstone, Commentaries, c. 8, *300.
8. Although this statute appears in Title 19, regulating forfeitures under the customs laws, 26 U.S.C. § 7327 provides that: 'The provisions of law applicable to the remission or mitigation by the Secretary or his delegate of forfeitures under the customs laws shall apply to forfeitures incurred or alleged to have been incurred under the internal revenue laws.'
9. It is noteworthy that the libel instituted by the United States made claim to the $8,674 because 'a business was being operated by Donald Angelini, in violation of (the gambling tax provisions),' App. 5 (emphasis supplied), and that the evidence introduced at trial was consistent only with this theory of liability.
10. In the present case, the Government has not suggested that the Fifth Amendment provides Angelini with a defense only with respect to his failure to file the required registration and tax forms, and that the gambler's failure to pay the required tax may still be punished consistently with Marchetti and Grosso. This argument was properly abandoned by the Solicitor General on reargument in Marchetti and Grosso, see Brief for the United States on Reargument 37-41, Marchetti v. United States and Grosso v. United States, supra, and we held in Grosso that, '(a)lthough failures to pay the excise tax and to file a return are separately punishable under 26 U.S.C. § 7203, the two obligations must be considered inseparable for purposes of measuring the hazards of self-incrimination which might stem from payment of the excise tax.' 390 U.S., at 65, 88 S.Ct., at 712. Similarly, Marchetti ruled that: 'The statutory obligations to register and to pay the occupational tax are essentially inseparable elements of a single registration procedure.' 390 U.S., at 42-43, 88 S.Ct., at 699, and see n. 3. Consequently, it appears clear that the Fifth Amendment provides gamblers in Angelini's position with a complete defense.
11. United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754 (1953); Lewis v. United States, 348 U.S. 419, 75 S.Ct. 415, 99 L.Ed. 475 (1955).
12. See, e.g., Roberts v. Russell, 392 U.S. 293, 88 S.Ct. 1921, 20 L.Ed.2d 1100 (1968); McConnell v. Rhay, 393 U.S. 2, 89 S.Ct. 32, 21 L.Ed.2d 2 (1968); Arsenault v. Massachusetts, 393 U.S. 5, 89 S.Ct. 35, 21 L.Ed.2d 5 (1968); Berger v. California, 393 U.S. 314, 89 S.Ct. 540, 21 L.Ed.2d 508 (1969).
13. In the view of the writer of this opinion, the fact that this case had not become final by the time of this Court's decisions in Marchetti and Grosso suffices, without more, to require rejection of the Government's contention respecting nonretroactivity. See, e.g., Desist v. United States, 394 U.S. 244, 256, 89 S.Ct. 1030, 1037, 22 L.Ed.2d 248 (Harlan, J., dissenting), and Mackey v. United States (and companion cases), 401 U.S., at 675, 91 S.Ct., at 1171, 28 L.Ed.2d, at 410 (Harlan, J., concurring in judgments and dissenting).