511 U.S. 767 (1994), 93-144, Department of Revenue of Mont. v. Kurth Ranch

Docket Nº:No. 93-144
Citation:511 U.S. 767, 114 S.Ct. 1937, 128 L.Ed.2d 767, 62 U.S.L.W. 4429
Case Date:June 06, 1994
Court:United States Supreme Court

Page 767

511 U.S. 767 (1994)

114 S.Ct. 1937, 128 L.Ed.2d 767, 62 U.S.L.W. 4429




No. 93-144

United States Supreme Court

June 6, 1994

         Argued January 19, 1994



Montana law enforcement officers raided the farm of respondents—members of the extended Kurth family—arrested them, and confiscated and later destroyed their marijuana plants. After the Kurths pleaded guilty to drug charges, petitioner revenue department attempted, in a separate proceeding, to collect a state tax imposed on the possession and storage of dangerous drugs. That tax is collected only after any state or federal fines or forfeitures have been satisfied, and taxpayers must file a return after they are arrested. In bankruptcy proceedings filed by the Kurths, they objected to petitioner's proof of claim for the tax and challenged the tax's constitutionality. The Bankruptcy Court held, among other things, that the assessment on harvested marijuana, a portion of which resulted in a tax eight times the product's market value, was a form of double jeopardy invalid under the Federal Constitution, and the District Court affirmed. In affirming, the Court of Appeals determined that the central inquiry under United States v. Halper, 490 U.S. 435, is whether the sanction imposed is rationally related to the damages the government suffered, that the Kurths were entitled to an accounting to determine if the sanction constituted an impermissible second punishment, and that the tax was unconstitutional as applied to them because the State refused to offer any such evidence.


        The tax violates the constitutional prohibition against successive punishments for the same offense. Pp. 776-784.

        (a) Although deciding in Halper that a legislature's description of a statute as civil does not foreclose the possibility that it has a punitive character, and that a defendant convicted and punished for an offense may not have a nonremedial civil penalty imposed against him for the same offense in a separate proceeding, the Court did not consider whether a tax may similarly be characterized as punitive. However, the Court's recognition that the extension of a so-called tax's penalizing feature can cause it to lose its character as such and become a mere penalty, A. Magnano Co. v. Hamilton, 292 U.S. 40, 46, together with Halper's unequivocal statement that labels do not control in a double jeopardy inquiry, indicates that a tax is not immune from double jeopardy scrutiny simply because it is a tax. Pp. 776-780.

Page 768

        (b) While taxes are usually motivated by revenue-raising rather than punitive purposes, Montana's tax departs far from normal revenue laws. Its high rate and deterrent purpose, in and of themselves, do not necessarily render it punitive, but other unusual features set it apart from most taxes. That it is conditioned on the commission of a crime is significant of penal and prohibitory intent rather than the gathering of revenue. It is also exacted only after the taxpayer has been arrested for the precise conduct that gives rise to the tax obligation in the first place. Since the taxed activity is completely forbidden, the legitimate revenue-raising purpose that might support the tax could be equally well served by increasing the fine imposed upon conviction. In addition, it purports to be a property tax, yet it is levied on goods—here, the destroyed marijuana plants—that the taxpayer neither owns nor possesses. Pp. 780-783.

        (c) Since tax statutes serve a purpose quite different from civil penalties, it is inappropriate to subject Montana's tax to Halper's test for a civil penalty: whether the penalty is imposed as a remedy for actual costs to the State that are attributable to the defendant's conduct. Moreover, Montana has not claimed that its assessments can be justified on such grounds, and the same formula would have been used to compute the assessment regardless of the State's damages or whether it suffered any damages. Montana's tax is not the kind of remedial sanction that may follow the first punishment of a criminal offense. It is a second punishment that must be imposed during the first prosecution or not at all. P. 784.

986 F.2d 1308, affirmed.

        Stevens, J., delivered the opinion of the Court, in which Blackmun, Kennedy, Souter, and Ginsburg, JJ., joined. Rehnquist, C. J., post, p. 785, and O'Connor, J., post, p. 792, filed dissenting opinions. Scalia, J., filed a dissenting opinion, in which Thomas, J., joined, post, p. 798.

        Paul Van Tricht, Special Assistant Attorney General of Montana, argued the cause for petitioner. With him on the briefs was David W. Woodgerd, Special Assistant Attorney General.

        James A. Feldman argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Days and Deputy Solicitor General Bender.

Page 769

        James H. Goetz argued the cause and filed a brief for respondents.[*]

        Justice Stevens delivered the opinion of the Court.

        This case presents the question whether a tax on the possession of illegal drugs assessed after the State has imposed a criminal penalty for the same conduct may violate the constitutional prohibition against successive punishments for the same offense.[1]

Page 770


        Montana's Dangerous Drug Tax Act[2] took effect on October 1, 1987. The Act imposes a tax "on the possession and storage of dangerous drugs,"[3] Mont. Code Ann. § 15-25-111 (1987), and expressly provides that the tax is to be "collected only after any state or federal fines or forfeitures have been satisfied." § 15-25-111(3). The tax is either 10 percent of the assessed market value of the drugs as determined by the Montana Department of Revenue (DOR) or a specified amount depending on the drug ($100 per ounce for marijuana, for example, and $250 per ounce for hashish), whichever is greater. § 15-25-111(2). The Act directs the state treasurer to allocate the tax proceeds to special funds to support "youth evaluation" and "chemical abuse" programs and "to enforce the drug laws." §§ 15-25-121, 15-25-122.[4]

        In addition to imposing reporting responsibilities on law enforcement agencies,[5] the Act also authorizes the DOR to

Page 771

adopt rules to administer and enforce the tax. Under those rules, taxpayers must file a return within 72 hours of their arrest. Mont. Admin. Rule 42.34.102(1) (1988). The Rule also provides that "[a]t the time of arrest law enforcement personnel shall complete the dangerous drug information report as required by the department and afford the taxpayer an opportunity to sign it." Rule 42.34.102(3). If the taxpayer refuses to do so, the law enforcement officer is required to file the form within 72 hours of the arrest. Ibid. The "associated criminal nature of assessments under this act" justifies the expedited collection procedures. See Rule 42.34.103(3). The taxpayer has no obligation to file a return or to pay any tax unless and until he is arrested.


        The six respondents, all members of the extended Kurth family, have for years operated a mixed grain and livestock farm in central Montana.[6] In 1986 they began to cultivate and sell marijuana. About two weeks after the new Dangerous Drug Tax Act went into effect, Montana law enforcement officers raided the farm, arrested the Kurths, and confiscated all the marijuana plants, materials, and paraphernalia they found. In re Kurth Ranch, 145 B. R. 61, 66 (Bkrtcy. Ct. Mont. 1990).[7] The raid put an end to the

Page 772

marijuana business and gave rise to four separate legal proceedings.

        In one of those proceedings, the State filed criminal charges against all six respondents in the Montana District Court, charging each with conspiracy to possess drugs with the intent to sell, Mont. Code Ann. § 45-4-102 (1987), or, in the alternative, possession of drugs with the intent to sell, § 45-9-103.[8] Each respondent initially pleaded not guilty, but subsequently entered into a plea agreement. On July 18, 1988, the court sentenced Richard Kurth and Judith Kurth to prison and imposed suspended or deferred sentences on the other four family members.[9]

        The county attorney also filed a civil forfeiture action seeking recovery of cash and equipment used in the marijuana operation. The confiscated drugs were not involved in that action, presumably because law enforcement agents had destroyed them after an inventory. Respondents settled the forfeiture action with an agreement to forfeit $18,016.83 in cash and various items of equipment.

Page 773

        The third proceeding involved the assessment of the new tax on dangerous drugs. Despite difficulties the DOR had in applying the Act for the first time, it ultimately attempted to collect almost $900,000 in taxes on marijuana plants, harvested marijuana, hash tar and hash oil, interest, and penalties.[10] The Kurths contested the assessments in administrative proceedings. Those proceedings were automatically stayed in September 1988, however, when the Kurths initiated the fourth legal proceeding triggered by the raid on their farm: a petition for bankruptcy under Chapter 11 of the Bankruptcy Code. See 11 U.S.C. § 362(a).

        In the bankruptcy proceedings, the Kurths objected to the DOR's proof of claim for unpaid drug taxes and challenged the constitutionality of the Montana tax. After a trial, the Bankruptcy Court held most of the assessment invalid as a matter of state law,[11] but concluded that an assessment of $181,000 on 1,811 ounces of harvested marijuana was authorized by the Act. It held that...

To continue reading