Covelli v. Commissioner of Revenue Services

• Decision Date: 19 December 1995
• Docket Number: No. 15198,15198
• Citation: 668 A.2d 699,235 Conn. 539
• Court: Connecticut Supreme Court
• Parties: , 64 USLW 2511 Vito COVELLI v. COMMISSIONER OF REVENUE SERVICES

Page 699

668 A.2d 699

235 Conn. 539, 64 USLW 2511

Vito COVELLI v. COMMISSIONER OF REVENUE SERVICES

No. 15198.

Supreme Court of Connecticut.

Argued Sept. 19, 1995.

Decided Dec. 19, 1995.

Aaron S. Bayer, Deputy Attorney General, with whom, on the brief, were Gregory T. D'Auria and Anne O'Leary, Assistant Attorneys General, for the appellant (defendant).

Frank W. Louis, Hartford, for the appellee (plaintiff).

Susan C. Marks, Supervisory Assistant State's Attorney, filed a brief for the state division of Criminal Justice as amicus curiae.

Before PETERS, C.J., and CALLAHAN, BORDEN, BERDON, NORCOTT, KATZ and PALMER, JJ.

CALLAHAN, Justice.

The sole issue in this appeal ¹ is whether, pursuant to General Statutes § 12-651(a) ² the defendant, the commissioner of revenue services (commissioner), may collect a tax on illegal drugs assessed against the plaintiff, Vito Covelli, after the plaintiff had been arrested, prosecuted, convicted and sentenced for the possession of those same drugs with intent to sell in violation of General Statutes § 21a-277(a). ³ The commissioner appeals from the trial court's judgment prohibiting the imposition of the tax as violative of the double jeopardy clause of the fifth amendment to the United States constitution. ⁴ Relying on the United States Supreme Court's holding in Dept. of Revenue of Montana v. Kurth Ranch, 511 U.S. 767, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994), the trial court concluded that the double jeopardy clause was violated when the plaintiff, after having been punished criminally for possession of illicit drugs, subsequently was assessed a tax based upon his possession of those same illicit drugs. In reaching this conclusion, the trial court determined that the tax imposed pursuant to Connecticut's Marijuana and Controlled Substances Tax Act (act); General Statutes §§ 12-650 through 12-660; was punishment for purposes of double jeopardy analysis. We reverse the judgment of the trial court.

The relevant facts are undisputed. On November 5, 1992, state police officers searched the plaintiff's place of business in Colebrook, the Route 8 Cycle Shop, as well as a black Ford pickup truck and a trailer located on the premises. As a result of their search, the police discovered approximately one-half pound of cocaine. The plaintiff subsequently was arrested for possession of cocaine with intent to sell in violation of § 21a-277(a).

Immediately after seizing the cocaine, the state police submitted a drug tax referral form to the department of revenue services. ⁵ The referral form noted that the police had discovered 1250 grams of cocaine in the plaintiff's possession and indicated that the drug stamps required by § 12-651(a) had not been affixed to the drugs. As a result of the information contained in the referral form, the commissioner, pursuant to General Statutes § 12-655(b), ⁶ assessed an initial tax deficiency against the plaintiff. On December 21, 1993, the commissioner sent the plaintiff a final determination letter informing him that he owed $255,631 in tax pursuant to § 12-651, $255,631 as a penalty pursuant to General Statutes § 12-660(a), ⁷ plus interest of $41,540.04 pursuant to § 12-655(b), for a total amount due of $552,802.04. ⁸

On February 15, 1994, the plaintiff, in his criminal case, entered a plea of nolo contendere to the charge of possession of cocaine with intent to sell in violation of § 21a-277(a). The court sentenced the plaintiff to nine years imprisonment, execution suspended after three years, to be followed by four years of probation.

Following the imposition of his criminal sentence, the plaintiff filed this tax appeal in the Superior Court, contesting the validity of the tax that had been levied by the commissioner. In his appeal, the plaintiff claimed that the assessment constituted a second punishment for the same offense to which he previously had pleaded nolo contendere and had been sentenced. The plaintiff asserted that, consequently, the double jeopardy clause of the fifth amendment to the United States constitution precluded collection of the tax. The tax session of the Superior Court granted the plaintiff's motion for summary judgment on this issue, based upon the decision of the United States Supreme Court in Dept. of Revenue of Montana v. Kurth Ranch, supra, 511 U.S. 767, 114 S.Ct. 1937. Relying on Kurth Ranch, the trial court concluded that Connecticut's tax on controlled substances constituted punishment for double jeopardy purposes and, therefore, could not be imposed upon the plaintiff because he had been punished previously for the same underlying conduct. ⁹ This appeal followed.

In reviewing a trial court's ruling on a motion for summary judgment when the material facts are undisputed, we must decide whether the trial court erred in concluding that the moving party was entitled to judgment as a matter of law. Practice Book § 384; Home Ins. Co. v. Aetna Life & Casualty Co., 235 Conn. 185, 202, 663 A.2d 1001 (1995). The trial court based its conclusion on a record that consisted of a stipulation of facts, written briefs and oral arguments of counsel. The record before the trial court, therefore, was identical with the record before this court. Accordingly, our review of the ruling of the trial court is plenary, and we must determine whether the trial court's conclusions are legally and logically correct and find support in the facts appearing in the record. Morton Buildings, Inc. v. Bannon, 222 Conn. 49, 53-54, 607 A.2d 424 (1992).

The double jeopardy clause of the fifth amendment to the United States constitution provides that no person may "be subject for the same offense to be twice put in jeopardy of life or limb." The double jeopardy clause protects against a second prosecution for the same offense after acquittal, a second prosecution for the same offense after conviction and multiple punishments for the same offense. North Carolina v. Pearce, 395 U.S. 711, 717, 89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969). The third of these protections is at issue in this appeal. We must determine, therefore, whether, under the United States Supreme Court's holding in Kurth Ranch, assessment of Connecticut's tax on controlled substances is a subsequent punishment barred by the double jeopardy clause when it is imposed on an individual who previously had been punished criminally for the same conduct. ¹⁰ We conclude that imposition of the tax does not violate double jeopardy principles.

In Kurth Ranch, the United States Supreme Court held that a Montana tax on the possession of illegal drugs assessed after a criminal penalty had been imposed for the same underlying misconduct violated the double jeopardy clause of the fifth amendment to the United States constitution. Dept. of Revenue of Montana v. Kurth Ranch, supra, 511 U.S. 767, 114 S.Ct. at 1948. Montana's Dangerous Drug Tax Act imposed a tax "on the possession and storage of dangerous drugs" that was to be collected only after state or federal fines or forfeitures had been satisfied. Id., at ----, 114 S.Ct. at 1941. The amount of the tax was either 10 percent of the market value of the drugs as determined by the department of revenue or a specified amount depending upon the type of drug involved, whichever was greater. ¹¹ Id. The Montana act further required that all law enforcement personnel report any person subject to the tax to the department of revenue. Id. The taxpayer had no obligation to file a return or to pay any tax unless and until he or she had been arrested. Id. Under agency rules, ¹² the taxpayer had to file a return within seventy-two hours of arrest. ¹³

In Kurth Ranch, the defendants pleaded guilty to charges arising from their operation of a marijuana farm. ¹⁴ Thereafter, the defendants were sentenced in accordance with their plea agreements. ¹⁵ In a separate proceeding, the department of revenue imposed Montana's dangerous drug tax on the illegal drugs discovered on the Kurth Ranch property. ¹⁶

The defendants challenged the imposition of the tax, claiming that the dangerous drug tax violated their double jeopardy right to be free from multiple punishments for the same offense. The Bankruptcy Court, the federal District Court and the Ninth Circuit Court of Appeals all agreed with the defendants and concluded that the tax was an additional punishment for the same offense that violated the double jeopardy clause. The state appealed to the United States Supreme Court. ¹⁷ In the appeal, the Supreme Court was presented with the following question: "[W]hether a tax on the possession of illegal drugs assessed after the State has imposed a criminal penalty for the same conduct may violate the constitutional prohibition against successive punishment for the same offense." Id., at ----, 114 S.Ct. at 1941.

Initially, the court recognized that "the unlawfulness of an activity does not prevent its taxation." Id., at ----, 114 S.Ct. at 1945; see, e.g., Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968) (upholding federal tax on gambling activities that were prohibited by state law); James v. United States, 366 U.S. 213, 81 S.Ct. 1052, 6 L.Ed.2d 246 (1961) (upholding federal income tax on embezzled money imposed on person who had pleaded guilty to conspiracy to embezzle under state law); United States v. Constantine, 296 U.S. 287, 56 S.Ct. 223, 80 L.Ed. 233 (1935) (upholding federal excise tax on liquor sales that violated state law). The court, however, noted that " 'there comes a time in the extension of the penalizing features of the so-called tax when it loses its character [as such] and becomes a mere penalty with the characteristics of regulation and punishment.' " Dept. of Revenue of Montana v. Kurth Ranch, supra, 511 U.S. at ---- 114 S.Ct. at 1946, quoting A. Magnano Co. v. Hamilton, 292 U.S. 40, 46, 54 S.Ct. 599, 602, 78 L.Ed. 1109 (1934). Accordingly, the court was required to determine whether Montana's dangerous drug tax...