U.S. v. One 1975 Pontiac Lemans, Vehicle I.D. No. 2F37M56101227

Citation621 F.2d 444
Decision Date09 May 1980
Docket NumberNo. 79-1275,79-1275
Parties80-1 USTC P 16,339 UNITED STATES of America, Plaintiff, Appellee, v. ONE 1975 PONTIAC LEMANS, VEHICLE I.D. NO. 2F37M56101227, Defendant, Appellee. Appeal of Irma ZULLO, Defendant.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

John F. Toomey, Jr., Boston, Mass., with whom Owen Gallagher and Gallagher & Gallagher, Boston, Mass., were on brief, for defendant.

John R. Tarrant, III, Sp. Atty. U. S. Dept. of Justice, Washington, D.C., with whom Edward F. Harrington, U. S. Atty. and Jeremiah T. O'Sullivan, Sp. Atty., U. S. Dept. of Justice, Boston, Mass., were on brief, for plaintiff-appellee.

Before COFFIN, Chief Judge, CAMPBELL, Circuit Judge, and BONSAL, * Senior District Judge.

LEVIN H. CAMPBELL, Circuit Judge.

The United States instituted an action in rem in the district court, 470 F.Supp. 1243, seeking the forfeiture of claimant Irma Zullo's automobile under the provisions of 26 U.S.C. § 7302. The district court, finding that the car had been used in violation of the internal revenue laws and had been properly seized, without a warrant, by agents of the Treasury Department, denied Zullo's claim for return of the car and ordered that it be forfeit to the government. On appeal, Zullo argues that: (1) the car was not subject to forfeiture because there was no finding of claimant Zullo's intent to violate the internal revenue laws, (2) the statute under which the seizure was effected requires a warrant for such seizures, (3) the agent who seized the car lacked probable cause to believe it had been used in violation of the internal revenue laws, and (4) the warrantless seizure of the car was not justified by exigent circumstances.

The district court tried this action on facts stipulated by the parties, which may be summarized as follows. From early June 1975 through January 1976, Thomas J. Connelly, Special Agent of the Bureau of Alcohol, Tobacco and Firearms, worked undercover investigating violations of the wagering laws in the Chelsea, Massachusetts area. During this period, Connelly observed Charles Zullo, claimant's husband, collecting wagering slips and money from a barmaid in the Chelsea restaurant, placed wagers with and collected winnings from Zullo, and carried on a conversation with Zullo in which he told Connelly that he had "been in the booking business for forty years." On October 14, 1975, Zullo told Connelly that he had traded his old car for a 1975 Pontiac Lemans Grand Am. On several occasions thereafter, Connelly either placed bets with Zullo while he was seated in the 1975 Pontiac or observed Zullo using the Pontiac to drive away from one of his betting transactions with wagers and wagering records in his possession.

On February 5, 1976, Connelly advised Special Agent Joseph V. Leone of the Bureau of Alcohol, Tobacco and Firearms that Zullo had used a 1975 Pontiac Lemans, white with red top, Massachusetts registration 4T6319 ("the Pontiac"), on October 23 and November 6, 1975, to transport wagering paraphernalia and related money, and that on December 2, 1975, Zullo had accepted a wager while sitting in the car. On February 5, 1976 a federal magistrate issued a warrant to search the person of Charles Zullo for "gambling records and wagering paraphernalia," and on February 6, 1976, the warrant was executed. Also on February 6, 1976, Agent Leone, acting pursuant to sections 7302 and 7321 of the Internal Revenue Code, 26 U.S.C. §§ 7302, 7321, 1 seized the Pontiac without a warrant from a public street in Chelsea, Massachusetts. The Pontiac is registered to the claimant, Irma Zullo, who denies any knowledge of the car's use in connection with illegal gambling.

I.

Claimant urges us to hold that since the district court made no findings that she had intentionally used the Pontiac in violation of the internal revenue laws, the government was not entitled to forfeiture under section 7302. This argument runs counter to the common law theory of forfeiture. See Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680-84, 94 S.Ct. 2080, 2090-92, 40 L.Ed.2d 452 (1974). The central concept has been that property subject to forfeiture is, in effect, "guilty" and hence deserving of confiscation. 2 United States v. United States Coin & Currency, 401 U.S. 715, 719-20, 91 S.Ct. 1041, 1043-44, 28 L.Ed.2d 434 (1971). Courts applying the various federal forfeiture statutes 3 have "almost uniformly" rejected innocence of the property's owner as a defense to a government forfeiture action. Calero-Toledo, supra, 416 U.S. at 683, 94 S.Ct. at 2091; see, e. g., Van Oster v. Kansas, 272 U.S. 465, 467, 47 S.Ct. 133, 134, 71 L.Ed. 354 (1926); United States v. $6,700, 615 F.2d 1 (1st Cir. 1980).

Section 7302 has been applied in light of this traditional view of forfeiture. In Interbartolo v. United States, 303 F.2d 34, 37 (1st Cir. 1962), we stated that "the thrust of Section 7302 is directed not at the individual but at property utilized to violate the pertinent revenue laws." More recently, the Fifth Circuit has held that the only requisite intent in a section 7302 forfeiture action is that "the property in question had been intentionally used (by someone) as an 'active aid' in the violation of the internal revenue laws." United States v. One 1968 Ford Ltd., 425 F.2d 1084, 1085 (5th Cir. 1970). Here the evidence indicates that claimant's Pontiac had been intentionally used by her husband as an "active aid" to an illegal bookmaking operation.

It is true that in United States v. United States Coin & Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434, the Court stated, with reference to 26 U.S.C. §§ 7302, 7321,

"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."

Id., 721-22, 91 S.Ct. at 1044. The Court reached this result in light of 26 U.S.C. § 7327 which, it noted, establishes a remission and mitigation procedure that "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." 4 Id., 721, 91 S.Ct. 1044. Coin & Currency, however, is of no avail to claimant. The possibility that claimant may be able to prevail in an administrative remission proceeding on her contention that her car was used without any intention on her part to violate the internal revenue laws does not entitle her to bypass her administrative remedy and to interpose her contention as a defense to a forfeiture proceeding. See United States v. One Clipper Bow Ketch Nisku, 548 F.2d 8, 12 (1st Cir. 1977) (administrative remission procedure is sole mechanism for affording leniency from forfeiture). We do not read Coin & Currency, which was addressed to the entirely different question whether a fifth amendment privilege against self-incrimination could be asserted in a forfeiture proceeding, as signalling a departure from the settled rule that a property owner's innocence is generally no defense to a forfeiture action.

It may be that forfeiture statutes cannot be constitutionally applied to one who alleges and proves "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." Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 689-90, 94 S.Ct. 2080, 2095, 40 L.Ed.2d 452 (1974); United States v. $6,700, 615 F.2d 1 (1st Cir. 1980). The district court, applying Calero-Toledo, noted that claimant had failed to allege she "did all that (she) reasonably could to avoid having (her) property put to an unlawful use." Claimant alleged only that she did not know of the use of the Pontiac in conjunction with her husband's bookmaking operation, not that she was unaware of his personal involvement in this criminal activity. The stipulated facts suggest that such unawareness is unlikely given her husband's assertion that he had been in the business for forty years. Moreover, claimant's ownership of the Pontiac is not necessarily dispositive even if she were totally oblivious to her husband's actions, since the stipulated record contains statements by Zullo to Agent Connelly that "he" had traded his earlier Chevrolet for the vehicle in question, and that the earlier vehicle, at least, was kept "in his wife's name so the cops can't take it." See United States v. One 1954 Mercury 2-Door Sedan, 128 F.Supp. 891, 895 (D.Va.1955). We conclude claimant failed to meet the Calero-Toledo standard in both her allegations and proof.

II.

Claimant also asserts that the government is not entitled to forfeiture because agent Leone's warrantless seizure of the Pontiac violated the provisions of section 7302 stating that "(a) search warrant may issue as provided in chapter 205 of title 18 of the United States Code and the Federal Rules of Criminal Procedure for the seizure of such property. . . ." She argues that since a forfeiture provision such as this is penal in nature, and therefore should be strictly construed, we should read this language as permitting seizures only on authority of a warrant issued on probable cause, "absent applicable exigent circumstances" that would justify a warrantless seizure.

Although it is true that forfeiture statutes such as this one are in one sense correctly regarded as penal, see United States v. United States Coin & Currency, 401 U.S. at 718, 91 S.Ct. 1041, 1043, 28 L.Ed.2d 434; Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886), "(s)tatutes to prevent fraud on the revenue are construed less narrowly, even though a forfeiture results, than penal statutes and others involving forfeitures." United States v. Ryan, 284 U.S. 167, 172, 52 S.Ct. 65, 67, 76 L.Ed. 224 (1931); see United States v. Windle, ...

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