Calero-Toledo v. Pearson Yacht Leasing Co.

Decision Date15 May 1974
Docket NumberS,No. 73,CALERO-TOLED,73
Citation94 S.Ct. 2080,416 U.S. 663,40 L.Ed.2d 452
PartiesAstoluperintendent of Police, et al., Appellants, v. PEARSON YACHT LEASING CO. —157
CourtU.S. Supreme Court

See 417 U.S. 977, 94 S.Ct. 3187.

Syllabus

A pleasure yacht, which appellee had leased to Puerto Rican residents, was seized, pursuant to Puerto Rican statutes providing for forfeiture of vessels used for unlawful purposes, without prior notice to appellee or the lessees and without a prior adversary hearing, after authorities had discovered marihuana aboard her. Appellee was neither involved in nor aware of a lessee's wrongful use of the yacht. Appellee then brought suit challenging the constitutionality of the statutory scheme. A three-judge District Court, relying principally on Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556, held that the statutes' failure to provide for preseizure notice and hearing rendered them unconstitutional and that, as applied to forfeit appellee's interest in the yacht, they unconstitutionally deprived an innocent party of property without just compensation. Held:

1. The statutes of Puerto Rico are 'State statute(s)' for purposes of the Three-Judge Court Act, and hence a three-judge court was properly convened under that Act and direct appeal to this Court was proper under 28 U.S.C. § 1253. Pp. 669—676.

2. This case presents and 'extraordinary' situation in which postponement of notice and hearing until after seizure did not deny due process, since (1) seizure under the statutes serves significant governmental purposes by permitting Puerto Rico to assert in rem jurisdiction over the property in forfeiture proceedings, thereby fostering the public interest in preventing continued illicit use of the property and in enforcing criminal sanctions; (2) preseizure notice and hearing might frustrate the interests served by the statutes, the property seized often being of the sort, as here, that could be removed from the jurisdiction, destroyed, or concealed, if advance notice were given; and (3), unlike the situation in Fuentes v. Shevin, supra, seizure is not initiated by self-interested private parties but by government officials. Pp. 676—680. 3. Statutory forfeiture schemes are not rendered unconstitutional because of their applicability to the property interests of innocents, and here the Puerto Rican statutes, which further punitive and deterrent purposes, were validly applied to appellee's yacht. Pp. 680—690.

363 F.Supp. 1337, reversed.

Lynn R. Coleman for appellants.

Gustavo A. Gelpi, San Juan, P.R., for appellee.

Mr. Justice BRENNAN delivered the opinion of the Court.

The question presented is whether the Constitution is violated by application to appellee, the lessor of a yacht, of Puerto Rican statutes providing for seizure and forfeiture of vessels used for unlawful purposes when (1) the yacht was seized without prior notice or hearing after allegedly being used by a lessee for an unlawful purpose, and (2) the appellee was neither involved in nor aware of the act of the lessee which resulted in the forfeiture.

In March 1971, appellee, Pearson Yacht Leasing Co., leased a pleasure yacht to two Puerto Rican residents. Puerto Rican authorities discovered marihuana on board the yacht in early May 1972, and charged one of the lessees with violation of the Controlled Substances Act of Puerto Rico, P.R.Laws Ann., Tit. 24, § 2101 et seq. (Supp.1973). On July 11, 1972, the Superintendent of Police seized the yacht pursuant to P.R.Laws Ann., Tit. 24, §§ 2512(a)(4), (b) (Supp.1973),1 and Tit. 34, § 1722 (1971),2 which provide that vessels used to transport, or to facilitate the transportation of, controlled substances, including marihuana, are subject to seizure and forfeiture to the Commonwealth of Puerto Rico. The vessel was seized without prior notice to appellee or either lessee and without a prior adversary hearing. The lessees, who had registered the yacht with the Ports Authority of the Commonwealth, were thereafter given notice within 10 days of the seizure, as required by § 1722(a).3 But when a challenge to the seizure was not made within 15 days after service of the notice, the yacht was forfeited for official use of the Government of Puerto Rico pursuant to § 1722(c).4 Appellee shortly thereafter first learned of the seizure and forfeiture when attempting to repossess the yacht from the lessees, because of their apparent failure to pay rent. It is conceded that appellee was 'in no way . . . involved in the criminal enterprise carried on by (the) lessee' and 'had no knowledge that its property was being used in connection with or in violation of (Puerto Rican Law).'

On November 6, 1972, appellee filed this suit, seeking a declaration that application of P.R.Laws Ann., Tit. 24, §§ 2512(a)(4), (b), and Tit. 34, § 1722, had (1) unconstitutionally denied it due process of law insofar as the statutes authorized appellants, the Superintendent of Police and the Chief of the Office of Transportation of the Commonwealth, to seize the yacht without notice or a prior adversary hearing, and (2) unconstitutionally deprived appellee of its property without just compensation.5 Injunctive relief was also sought.

A three-judge District Court,6 relying principally upon Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), held that the failure of the statutes to provide for preseizure notice and hearing rendered them constitutionally defective. 363 F.Supp. 1337, 1342—1343 (PR 1973). Viewing United States v. United States Coin & Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971), as having effectively overruled our prior decisions that the property owner's innocence has no constitutional significance for purposes of forfeiture, the District Court further declared that the Puerto Rican statutes, insofar as applied to forfeit appellee's interest in the yacht, unconstitutionally deprived it of property without just compensation. 363 F.Supp., at 1341—1342. Appellants were accordingly enjoined from enforcing the statutes 'insofar as they deny the owner or person in charge of property an opportunity for a hearing due to the lack of notice, before the seizure and forfeiture of its property and insofar as a penalty is imposed upon innocent parties.' Id., at 1343—1344. We noted probable jurisdiction. 414 U.S. 816, 94 S.Ct. 69, 38 L.Ed.2d 48 (1973). We reverse.

I

Although the parties consented to the convening of the three-judge court and hence do not challenge our juris- diction to decide this direct appeal, we nevertheless may not entertain the appeal under 28 U.S.C. § 12537 unless statutes of Puerto Rico are 'State statute(s)' for purposes of the Three-Judge Court Act, 28 U.S.C. § 2281.8 We therefore turn first to that question.

In Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 69 S.Ct. 606, 93 L.Ed. 741 (1949), this Court held that enactments of the Territory of Hawaii were not 'State statute(s)' for purposes of Judicial Code § 266, the predecessor to 28 U.S.C. § 2281, reasoning:

'While, of course, great respect is to be paid to the enactments of a territorial legislature by all courts as it is to the adjudications of territorial courts, the predominant reason for the enactment of Judicial Code § 266 does not exist ad respects territories. This reason was a congressional purpose to avoid unnecessary interference with the laws of a sovereign state. In our dual system of government, the position of the state as sovereign over matters not ruled by the Constitution requires a deference to state legislative action beyond that required for the laws of a territory. A territory is subject to congressional regulation.' 336 U.S., at 377—378, 69 S.Ct., at 611 (footnotes omitted) (emphasis added).

Similar reasoning—that the purpose of insulating a sovereign State's laws from interference by a single judge would not be furthered by broadly interpreting the word 'State'—led the Court of Appeals for the First Circuit some 55 years ago to hold § 266 inapplicable to the laws of the Territory of Puerto Rico. Benedicto v. West India & Panama Tel. Co., 256 F. 417 (1919).

Congress, however, created the Commonwealth of Puerto Rico after Benedicto was decided. Following the Spanish-American War, Puerto Rico was ceded to this country in the Treaty of Spain, 30 Stat. 1754 (1889). A brief interlude of military control was followed by congressional enactment of a series of Organic Acts for the government of the island. Initially these enactments established a local governmental structure with high officials appointed by the President. These Acts also retained veto power in the President and Congress over local legislation. By 1950, however, pressures for greater autonomy led to congressional enactment of Pub.L. 600, 64 Stat. 319, which offered the people of Puerto Rico a compact whereby they might establish a government under their own constitution. Puerto Rico accepted the compact, and on July 3, 1952, Congress approved, with minor amendments, a constitution adopted by the Puerto Rican populace, 66 Stat. 327; see note accompanying 48 U.S.C. § 731d. Pursuant to that constitution the Commonwealth now 'elects its Governor and legislature; appoints its judges, all cabinet officials, and lesser officials in the executive branch; sets its own educational policies; determines its own budget; and amends its own civil and criminal code.' Leibowitz, The applicability of Fed- eral Law to the Commonwealth of Puerto Rico, 56 Geo.L.J. 219, 221 (1967); see 28 Dept. of State Bull. 584—589 (1953); Americana of Puerto Rico, Inc. v. Kaplus, 368 F.2d 431 (CA3 1966); Magruder, The Commonwealth Status of Puerto Rico, 15 U.Pitt.L.Rev. 1 (1953).

These significant changes in Puerto Rico's governmental structure formed the backdrop to Judge Magruder's observations in Mora v. Mejias, 206 F.2d 377 (CA1 1953):

'(I)t may be that the Commonwealth of Puerto Rico'El Estado...

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