City of Bellevue v. Cashier's Check for $51,000.00 & $1,130.00 in U.S. Currency

• Decision Date: 26 July 1993
• Docket Number: No. 30872-6-I,30872-6-I
• Citation: 855 P.2d 330,70 Wn.App. 697
• Court: Washington Court of Appeals
• Parties: CITY OF BELLEVUE, Appellant, v. CASHIER'S CHECK FOR $51,000.00 & $1,130.00 IN U.S. CURRENCY, Defendant, Howard P. Pruzan, Personal Representative of the Estate of Lula Belle Anderson, Respondent. Division 1

Page 697

70 Wn.App. 697

855 P.2d 330

CITY OF BELLEVUE, Appellant, v. CASHIER'S CHECK FOR $51,000.00 & $1,130.00 IN U.S. CURRENCY, Defendant, Howard P. Pruzan, Personal Representative of the Estate of

Lula Belle Anderson, Respondent.

No. 30872-6-I.

Court of Appeals of Washington,

Division 1.

July 26, 1993.

Richard L. Andrews, City Atty., and Ruth Evelyn Darden, Asst. City Atty., John Martin and O'Shea, Straight, Barnard & Martin, Bellevue, for appellant.

Reba Weiss, Steinborn & Associates, Seattle, for respondent.

COLEMAN, Judge.

The City of Bellevue appeals the trial court's order of summary judgment, arguing that (1) the illegal use of property by the personal representative ¹ and sole beneficiary subjected the property to the state forfeiture statute, and the estate should not be permitted to assert the innocent owner defense, (2) the successor personal representative, who was appointed after the crime was committed, did not have standing to assert the innocent owner defense, and (3) the creditors of the estate should not be paid with property that is subject to the forfeiture statute. We affirm.

Lula Belle Anderson died in January 1991. The primary asset of her estate was a home located in south Seattle. In early February 1991, Anderson's son, Alfred Williams, consulted Howard Pruzan, an attorney, regarding the probate of the estate and the sale of the house. Because Williams believed that Anderson left no will, Pruzan made arrangements to have Williams appointed personal representative of the estate. Also at that time, Williams presented Pruzan with a real estate purchase and sale agreement that he had negotiated for the home.

After a title search revealed three outstanding mortgages on the home, Pruzan, with Williams' approval, initiated a quiet title action. Shortly thereafter, Pruzan was informed that Anderson's will had been located. The will named Robert Willis as executor and Williams as sole beneficiary. On June 12, 1991, an order was entered confirming Willis as executor of the estate.

The quiet title decree was issued on June 13, 1991, and the house was sold soon thereafter. Williams received net proceeds totalling $62,092.20. He converted a portion of the proceeds into a cashier's check, dated June 25, 1991, and made payable to "Alfred L. Williams, Personal Rep. for Estate of Lulabelle [sic ] Anderson".

On June 26, 1991, after negotiating a large purchase of cocaine from undercover police officers, Williams and Willis were arrested for conspiracy to possess with intent to distribute 500 or more grams of cocaine. Williams was also charged with possession with intent to distribute 500 or more grams of cocaine. At the time of the arrest, Williams had on his person the cashier's check and $1,130 in currency, both of which were seized by the City of Bellevue. Williams and Willis were subsequently convicted.

On July 10, 1991, in order to contest the forfeiture of the property, Pruzan was appointed successor personal representative of the estate. The forfeiture action was commenced, and on April 13, 1992, the trial court granted each party partial summary judgment, decreeing that (1) the estate was the innocent owner of the money and had a superior interest in it for purposes of satisfying claims of creditors and expenses of administration and (2) the City had probable cause to seize the money and therefore had a claim in the probate proceedings to all funds that would otherwise be distributed to either Williams or Willis, in any capacity. Bellevue appeals.

The sole issue on appeal is whether Pruzan, as personal representative of the estate, qualifies as the innocent owner of the portion of the cashier's check needed to pay the creditors of the estate and the expenses of administration.

RCW 69.50.505(a)(7) provides for the forfeiture of all money and negotiable instruments furnished or intended to be furnished in exchange for a controlled substance. However, no property may be forfeited "to the extent of the interest of an owner, by reason of any act or omission which that owner establishes was committed or omitted without the owner's knowledge or consent[.]" RCW 69.50.505(a)(7). ² Once the seizing agency has shown probable cause for seizing an item, the burden shifts to the owner to show by a preponderance of the evidence that the property was used without his or her consent or knowledge. ³ Rozner v. Bellevue, 116 Wash.2d 342, 350, 804 P.2d 24 (1991).

A recent Supreme Court case, United States v. 92 Buena Vista Avenue, --- U.S. ----, 113 S.Ct. 1126, 122 L.Ed.2d 469 (1993), sets forth guidelines for determining who can assert the innocent owner defense. In Buena Vista, the respondent's boyfriend had given her $240,000 to purchase a home, in which she lived between 1982 and 1989. Buena Vista, --- U.S. at ----, 113 S.Ct. at 1130. In 1989, the government initiated forfeiture proceedings against the home, claiming that it had been purchased with the proceeds of illegal drug transactions. The respondent contested the forfeiture, claiming that she was an innocent owner because she was unaware that the money used to purchase the home was obtained from illegal drug trafficking. Buena Vista, --- U.S. at ----, 113 S.Ct. at 1130.

The government argued that under the relation back doctrine, ownership of the money vested in the government at the time the illegal acts occurred. Therefore, the government claimed, the respondent could have no legitimate ownership interest in the house. Buena Vista, --- U.S. at ----, 113 S.Ct. at 1134. The Court disagreed, holding that the relation back doctrine does not preclude a transferee who unknowingly obtains proceeds from an illegal drug transaction from asserting the innocent owner defense.

To reach this conclusion, the Court first determined that the government's title to property does not vest until forfeiture has been decreed. Buena Vista, --- U.S. at ----, 113 S.Ct. at 1137. The Court then reasoned that because someone must own the property between the time that the illegal acts occur and the time that forfeiture is decreed, it is possible for an innocent transferee to obtain an ownership interest in the property during that period. Buena Vista, --- U.S. at ----, 113 S.Ct. at 1136. This innocent owner may then contest the forfeiture, thereby preventing the government's title from vesting and preventing the relation back doctrine from coming into play. Buena Vista, --- U.S. at ----, 113 S.Ct. at 1137.

Because of the similarity between the Washington forfeiture statute and the federal forfeiture statute, Washington courts have frequently relied on federal cases in interpreting our state statute. See, e.g., Rozner, 116 Wash.2d at 351, 804 P.2d 24. In the present case we have determined that the applicability of Buena Vista to the facts before us depends on two factors: (1) whether the claimant, as personal representative of an estate, qualifies as an "owner" for purposes of asserting the innocent owner defense and (2) whether the claimant's knowledge of the illegal acts at the time he acquired his interest precludes him from asserting the defense. We conclude that the claimant's ownership interest is sufficient to allow him to assert the defense and that, under the unique circumstances presented here, his knowledge of the illegal acts does not preclude him from asserting the defense.

A. Does the Claimant Qualify as an Owner for Purposes of Asserting the Innocent Owner Defense?

RCW 11.04.250 provides that a devisee's title to real property vests immediately upon the death of the grantor, subject to the debts of the estate, family allowance, expenses of administration, and any other charges for which the real estate is liable under existing laws. Title to personal property, on the other hand, vests in the administrator of the decedent's estate for the payment of "expenses, debts, legacies and for distribution of the residue." Devereaux v. Anderson, 146 Wash. 657, 658, 264 P. 422 (1928).

In the present case, the cashier's check represented the proceeds from the sale of the home, the title to which vested in Williams at the time of Anderson's death, subject to the claims of creditors. However, regardless of whether the check itself is viewed as personal or real property, we conclude that the personal representative had an ownership interest in it to the extent that the money was needed to meet the claims of creditors who had fulfilled the statutory requirements for filing claims against the estate. ⁴

If the check is treated as personal property, title to it vested in the administrator for the payment of creditors' claims and expenses of administration. Devereaux, at 658, 264 P. 422. In People ex rel. Foreman v. Estate of Kawa, 152 Ill.App.3d 792, 105 Ill.Dec. 698, 504 N.E.2d 983 (1987), the bank opened a safety deposit box belonging to the decedent and discovered approximately $1,680 in currency and a quantity of cocaine. Kawa, 105 Ill.Dec. at 698, 504 N.E.2d at 983. The State initiated a forfeiture action against the currency. The administrator of Kawa's estate asserted the innocent owner defense, claiming that title to the contents of the box vested in the estate immediately upon Kawa's death and that the estate, as a fictional entity, could not have known of the illegal acts. Kawa, 152 Ill.App.3d at 797, 105 Ill.Dec. at 700, 504 N.E.2d at 985.

Relying on definitions of the word "owner" from a variety of sources, the court concluded that the administrator and beneficiaries of the estate were the "owners" of the property. Kawa, 152 Ill.App.3d at 799-800, 105 Ill.Dec. at 702, 504 N.E.2d at 987. The court reasoned, however, that because the incidents of ownership were divided between the beneficiary and the administrator of the estate, each party holding an interest would have to demonstrate that he or she was innocent. As the court stated:

Since the administrator is vested with the naked legal title to the personal property of an intestate, the...