910 F.2d 343 (6th Cir. 1990), 88-2238, In re U.S. v. Certain Real Property Located at 2525 Leroy Lane

Docket Nº:88-2238.
Citation:910 F.2d 343
Party Name:UNITED STATES of America Plaintiff-Appellant, v. CERTAIN REAL PROPERTY LOCATED AT 2525 LEROY LANE, WEST BLOOMFIELD, MICHIGAN, and Leah Liza Marks, Defendants-Appellees.
Case Date:August 08, 1990
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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910 F.2d 343 (6th Cir. 1990)

UNITED STATES of America Plaintiff-Appellant,

v.

CERTAIN REAL PROPERTY LOCATED AT 2525 LEROY LANE, WEST

BLOOMFIELD, MICHIGAN, and Leah Liza Marks,

Defendants-Appellees.

No. 88-2238.

United States Court of Appeals, Sixth Circuit

August 8, 1990

Argued Sept. 21, 1989.

Rehearing and Rehearing En Banc Denied Oct. 11, 1990.

Page 344

Peter A. Caplan (argued), Asst. U.S. Atty., Detroit, Mich., for plaintiff-appellant.

Martin W. Bordoley, Southfield, Mich., Martin S. Baum, Colista, Adams, Dettmer & Palmer, Detroit, Mich., Stephen J. Bock (argued), Liberson, Bloom, Bloom & Bock, Southfield, Mich., for defendants-appellees.

Before MERRITT, Chief Judge, KRUPANSKY, Circuit Judge, and GRAHAM, District Judge. [*]

GRAHAM, District Judge.

This is an appeal by the Government from a judgment of the United States District Court for the Eastern District of Michigan awarding the entire proceeds from the sale of property seized pursuant to 21 U.S.C. Secs. 853 and 881 to the claimant-innocent owner. The issues presented concern the operation of these federal drug forfeiture statutes upon the interests of an innocent spouse in real property held as a tenancy by the entirety under Michigan law.

On February 26, 1987, an indictment was returned in the Eastern District of Michigan against Mitchell Dennis Marks. The indictment charged Mitchell Marks with

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one count of conspiracy to possess with intent to distribute cocaine on or about December 15, 1985 through December 17, 1985 and one count of distribution of cocaine on or about December 15, 1985. The indictment also contained a forfeiture count pursuant to 21 U.S.C. Sec. 853(a)(2), which alleged that Mr. Marks had an interest in real property located at 2525 Leroy Lane, West Bloomfield, Michigan which he used or intended to use to commit or facilitate the commission of a violation of the Controlled Substances Act. The real property in question was seized pursuant to a warrant issued by a United States Magistrate on February 12, 1987.

Mr. Marks was convicted by a jury and a judgment order imposing sentence was filed on June 6, 1988. The judgment also ordered the forfeiture of Mr. Marks's interest in the real property. On July 15, 1988, Leah Liza Marks, claimant-appellee and wife of Mitchell Marks, filed a petition in the criminal case for a determination of her interest in the real property, as well as a claim to the property.

In the interim, on April 17, 1987, the Government filed a civil complaint for forfeiture pursuant to 21 U.S.C. Sec. 881(a)(7) against the real property. On May 8, 1987, Leah Marks filed an answer to the complaint, and on May 15, 1987, she filed a claim of interest in the real property. The civil and criminal forfeiture proceedings were subsequently consolidated.

In the proceedings before the district court, the parties stipulated that the real property known as 2525 Leroy Lane was owned by Leah Marks with her husband, Mitchell Marks, as tenants by the entirety. By agreement of the parties dated April 29, 1988, the real property was sold and the proceeds of the sale were designated as a substitute res in which the parties were deemed to have the same interest as they had in the real estate. The Government and Leah Marks also entered into a stipulation of facts on November 2, 1988, in which the Government agreed that Leah Marks was an "innocent owner" within the meaning of the forfeiture provisions.

By order entered on November 7, 1988, the district court awarded judgment to claimant Leah Marks. The district court concluded that Leah Marks had a legal interest in the property "rather than" her husband for purposes of 21 U.S.C. Sec. 853(n)(6)(A), and was an innocent owner under 21 U.S.C. Sec. 881(a)(7), so as to avoid forfeiture of the property. The district court further found that claimant's entireties interest constituted an interest in the property as a whole, and that her innocent owner status operated to avoid forfeiture as to the entire property. For the following reasons, we vacate the judgment of the district court.

The Government proceeded in this case under both the criminal and civil Title 21 forfeiture provisions. The criminal forfeiture statute, 21 U.S.C. Sec. 853, provides in relevant part:

(a) Property subject to criminal forfeiture

Any person convicted of a violation of this subchapter or subchapter II of this chapter punishable by imprisonment for more than one year shall forfeit to the United States, irrespective of any provision of State law--

* * * * * *

(2) any of the person's property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, such violation, ...

The term "property" in this section includes real property. 21 U.S.C. Sec. 853(b)(1). When an order of forfeiture has been entered under Sec. 853, a third party asserting a legal interest in the property may petition the court for a hearing to adjudicate the nature of his or her interest in the property. 21 U.S.C. Sec. 853(n). Under 21 U.S.C. Sec. 853(n)(6)(A), relief from forfeiture may be obtained where the petitioner establishes by a preponderance of the evidence that:

the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right,

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title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section ...

The provisions for civil forfeiture are found in 21 U.S.C. Sec. 881. Title 21, Sec. 881(a)(7) provides for the forfeiture to the United States of:

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 title 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.

The criminal forfeiture provisions of 21 U.S.C. Sec. 853 authorize an in personam action against a defendant in a criminal case, and forfeiture in such a case is imposed as a sanction against the defendant upon his conviction. United States v. $39,000 in Canadian Currency, 801 F.2d 1210 (10th Cir.1986). Civil forfeiture, on the other hand, is an in rem proceeding wherein the subject property is treated as being itself guilty of wrongdoing. United States v. One 1976 Mercedes Benz 2805, 618 F.2d 453 (7th Cir.1980).

The Government's first argument on appeal is that Leah Marks lacks standing under Sec. 853(n)(6)(A) to contest the criminal forfeiture. The Government contends that she lacks a legal interest in the property which was vested in her "rather than the defendant or was superior to" the legal interest of the defendant, as required by that section.

At the time of the illegal acts which rendered the real property subject to forfeiture, Leah Marks and her husband owned the real property as tenants by the entirety under Michigan law. Tenants by the entirety, who must be husband and wife, hold under a single title with right of survivorship. Matter of Grosslight, 757 F.2d 773 (6th Cir.1985); Sanford v. Bertrau, 204 Mich. 244, 169 N.W. 880 (1918). Neither husband nor wife acting alone can alienate any interest in the property, nor can the creditors of one levy upon the property. Matter of Grosslight, 757 F.2d at 773.

A husband and wife holding by the entireties do not hold as joint tenants. "A joint tenancy implies a seisin per my et per tout, while an estate in entirety implies only a seisin per tout." In re Appeal of Lewis, 84 Mich. 340, 341, 48 N.W. 580 (1891).

A Michigan court in Rogers v. Rogers, 136 Mich.App. 125, 356 N.W.2d 288, 292-93 (1984) described the entireties estate as follows:

In Michigan real property law, tenancies by the entireties enjoy an ancient and hoary tradition. The usual and durable method for a husband and wife to hold real estate has been as tenants by the entireties. The classic basis for a tenancy by the entireties was the concept that "the husband and wife are but one person in the law". In a true tenancy by the entireties, each spouse is considered to own the whole and, therefore, is entitled to the enjoyment of the entirety and to survivorship. When real property is so held as tenants by the entireties, neither spouse acting alone can alienate or encumber to a third person an interest in the fee of lands so held. Neither the husband nor the wife has an individual, separate interest in entireties property, and neither has an interest in such property which may be conveyed, encumbered or alienated.

One incident of an estate by the entireties is that the survivor, whether husband or wife, is entitled to the whole and such right cannot be defeated by a conveyance by one spouse to a stranger. Traditionally, tenancies by the entireties could only be created by a written instrument of conveyance, which produced

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unity of persons, time, title, interest and possession. (Footnotes omitted).

Thus, under Michigan law, Leah Marks had not only an indivisible interest in the entireties property, but also a survivorship interest which would entitle her to sole ownership of the property upon her husband's death. Rogers, 356 N.W.2d at 293. Her survivorship interest constitutes a legal interest...

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