U.S. v. U.S. Currency, in the amount of $103,387.27

• Decision Date: 21 December 1988
• Docket Number: No. 87-2981,87-2981
• Citation: 863 F.2d 555
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. U.S. CURRENCY, IN THE AMOUNT OF $103,387.27, Defendant, v. Walter Harry STAMP, Tonya Stamp and LaTonya Stamp, A Minor by her parents and next friend, Walter Harry Stamp and Tonya Stamp, Intervenors/Claimants Counter Plaintiffs-Appellants, v. UNITED STATES MARSHAL SERVICE, Counter Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 555

863 F.2d 555

UNITED STATES of America, Plaintiff-Appellee, v. U.S. CURRENCY, IN THE AMOUNT OF $103,387.27, Defendant, v. Walter Harry STAMP, Tonya Stamp and LaTonya Stamp, A Minor by her parents and next friend, Walter Harry Stamp and Tonya Stamp, Intervenors/Claimants Counter Plaintiffs-Appellants, v. UNITED STATES MARSHAL SERVICE, Counter Defendant-Appellee.

No. 87-2981.

United States Court of Appeals Seventh Circuit.

Argued Sept. 13, 1988.

Decided Dec. 21, 1988.

Larry G. Whitney, Indianapolis, Ind., for defendant.

Sue Hendricks Bailey, Asst. U.S. Attys., U.S. Attys. Office, Indianapolis, Ind., for plaintiff-appellee.

Before POSNER, FLAUM, and MANION, Circuit Judges.

MANION, Circuit Judge.

This appeal grows out of a forfeiture action against $103,387.27 ¹ in United States Currency. The district court granted the government's motion to strike the claimants' "Answer, Defenses and Counterclaim" for failing to file a properly verified claim. The court also declined to extend the time for filing a verified claim which would have enabled claimants to amend their claim. We reverse the district court's judgment insofar as it denied the claimants an extension of time to file an amended claim.

I.

The Drug Enforcement Agency ("DEA") seized $103,387.27 in United States Currency from Harry and Tonya Stamp's residence in Anderson, Indiana, pursuant to a seizure warrant issued under 21 U.S.C.A. Sec. 881(a)(6) ² (West 1981) on April 14, 1986. The seizure followed a search of the Stamps' residence conducted pursuant to a * * *

warrant. The DEA seized the currency, alleging it had been furnished or was intended to be furnished in exchange for a controlled substance, that it constituted the proceeds of such an exchange, and that it had been used to facilitate violations of Subchapter I of Title 21. 21 U.S.C.A. Secs. 801-904 (West 1982). The United States Marshal took custody of the currency by order of the district court.

* * *

On December 15, 1986, the U.S. Attorney filed a complaint for forfeiture in the United States District Court for the Southern District of Indiana. A copy of the complaint was served on claimants' attorney, Larry G. Whitney, ³ on the same day. The district court issued orders for publication of notice and for warrant of arrest of property pursuant to Rules C(3) and (4) of the Supplemental Rules of Civil Procedure for Certain Admiralty and Maritime Claims ⁴ on January 8 and 15, 1987, respectively. On January 19, Whitney filed a "Claim of Owner" which stated:

CLAIM OF OWNER

And now W. Harry Stamp, Tonya Stamp, and an [sic] minor child of the Stamps, by counsel, Larry G. Whitney, authorized agent for this matter, owners of the U.S. CURRENCY in the amount of $103,387.27, etc., attached by the marshal, under process of this Court at the instance of United States Attorney for the Southern District of Indiana on January 15, 1987, and the persons above named, W. Harry Stamp, Tonya Stamp, and an [sic] minor child of the Stamps, declare they are the true and bona fide owners of the currency and negotiable instruments, and that no other person is the owner thereof.

WHEREFORE, owners pray to defend accordingly.

The claim was signed by Attorney Whitney as "Attorney and Agent for W. Harry Stamp, Tonya Stamp and minor child of Stamps."

On March 16, the district court permitted Harry Stamp, Tonya Stamp and LaTonya Stamp, the minor child of Harry and Tonya, to intervene. After two extensions of time were granted, the Stamps ("claimants") filed an answer to the complaint for forfeiture. The government filed a motion to strike the answer on May 27, ⁵ alleging that claimants had failed to file a proper claim of ownership.

The district court granted the government's motion to strike, reasoning that claimants had failed to file a properly verified claim. The court also refused to extend the time for filing a claim, entered judgment for the United States and ordered the currency paid into the United States Treasury. The district court denied the Stamps' subsequent motion to set aside the order.

On appeal, the Stamps argue that their ownership claim was properly verified, but, if it was not, that the claim was in substantial compliance with the rules so that it should be permitted to stand as filed. Finally, the Stamps contend that the district court should have granted them an extension of time to amend their claim if it was deficient. ⁶

II.

In United States v. United States Currency in the Amount of $2,857.00, 754 F.2d 208, this court described at length the judicial forfeiture process:

A judicial forfeiture proceeding is a civil action in rem. The United States attorney for the district where the seizure occurred commences a judicial forfeiture proceeding by filing a complaint as described in Supplemental Rule C(2). The complaint must describe with reasonable particularity the property that is the subject of the action, must state the place of seizure, and must contain any allegations required by the statute pursuant to which the action is brought. See Fed.R.Civ.P., Supp. Rule C(2).

Upon the filing of a complaint, the clerk of the district court issues a warrant for the arrest of the property that is the subject of the action. See Fed.R.Civ.P., Supp. Rule C(3). By order of the court, the plaintiff then must publish notice of the action and arrest in a newspaper of general circulation in the district. The notice must specify the time within which an answer is to be filed as provided by Rule C(6). See Fed.R.Civ.P., Supp. Rule C(4).

Any claimant of property that is the subject of a judicial condemnation proceeding must file a claim within ten days after process has been executed or within such additional time as may be allowed by the court, and must file an answer within twenty days after the filing of the claim. See Fed.R.Civ.P., Supp. Rule C(6). The claim "shall be verified on oath or solemn affirmation, and shall state the interest in the property by virtue of which the claimant demands its restitution and the right to defend the action." Id. Once the procedural requirements of Rule C(6) are met, a claimant has standing to defend the forfeiture.

Id. at 212-13.

The issue here is whether claimants' claim of ownership constitutes a properly verified claim under Rule C(6). As this court and others have observed, verification is an essential element of any claim because of the substantial danger of false claims. U.S. v. $2,857, 754 F.2d at 213; Baker v. United States, 722 F.2d 517, 519 (9th Cir.1983); United States v. Fourteen (14) Handguns, 524 F.Supp. 395 (S.D.Tex.1981). The Stamps do not challenge the importance of verification, but rather, contend that their claim of ownership was verified within the meaning of Rule C(6). Claimants argue there is no judicially recognized definition of verification and offer their own definition from a host of sources. ⁷ We disagree that there is no definition of what constitutes a proper verification and decline to adopt claimants' standard for a properly verified claim under Rule C(6).

Rule C(6) requires that claims be "verified on oath or solemn affirmation" but offers no further guidance as to what will constitute a verified claim. Its silence, though, does not open the door to limitless creative definitions of verification, for as other courts have held, state law fills the void created by Rule C in this respect. In United States v. Banco Cafetero International, 608 F.Supp. 1394, 1399-1400 (S.D.N.Y.1985), aff'd, 797 F.2d 1154 (2d Cir.1986), for example, the court stated that, "[i]n the absence of anything to the contrary in the local rules of the District within which the Complaint is filed, compliance with the verification procedures of the forum state should be sufficient" (quoting 7A J. Moore & A. Pelaez, Moore's Federal Practice p C.08 at p. 622 (2d ed. 1983)). Although the court in that case was referring to Rule C(2)--which requires that forfeiture complaints be verified--we think its reasoning applies equally to Rule C(6) in view of the fact that both rules require "verification" and because the rules contain identical language concerning verification. ⁸

Here the forfeiture complaint was filed in the Southern District of Indiana. Since no local rule addresses verification, the district court quite properly turned to Indiana law for the meaning of verification. Indiana Trial Rule 11(B) provides in part:

(B) Verification by Affirmation or Representation. When in connection with any civil or special statutory proceeding it is required that any pleading, motion, petition, supporting affidavit, or other document of any kind, be verified, or that an oath be taken, it shall be sufficient if the subscriber simply affirms the truth of the matter to be verified by an affirmation or representation in substantially the following language:

"I (we) affirm, under the penalties for perjury, that the foregoing representation(s) is (are) true.

(Signed) ____________"

Indiana courts have held that a proper verification under Trial Rule 11(B) requires the actual swearing to the truth of statements by the subscriber and that, at a minimum, it implicitly subject the signer to penalties for perjury. In Gary Community Mental Health Center, Inc. v. Indiana Department of Public Welfare, 496 N.E.2d 1345 (Ind.Ct.App.1986), the court held that a petition for review of an administrative decision, though duly notarized, was not properly verified, explaining that "a notarized petition without any indication that the statements contained therein are true will not suffice." Id. at 1347. To be adequately verified, the court held, the document "must use some language to indicate that the statements contained in [the document] are true...." Id. Likewise, the court in Indiana Civil Rights Commission v. City of Muncie, 459 N.E.2d 411 (Ind.Ct.App.1984), declared:

The Supreme Court of Indiana has held that ' "[v]erification ... includes both the actual swearing to the truth...