State ex rel. Thornburg v. Currency in the Amount of $52,029.00 in U.S. Currency, 7PA88

• Decision Date: 05 April 1989
• Docket Number: No. 7PA88,7PA88
• Citation: 324 N.C. 276,378 S.E.2d 1
• Court: North Carolina Supreme Court
• Parties: , 52 Ed. Law Rep. 764 The STATE of North Carolina, ex rel. Lacy H. THORNBURG, Attorney General v. CURRENCY IN THE AMOUNT OF $52,029.00 IN U.S. CURRENCY; One (1) 1976 Four Door Cadillac Seville automobile, Vehicle Identification Number 6S69R6Q498436; One (1) Smith & Wesson 44 Magnum Pistol, Model 29-3, Serial Number LB5425; and One (1) Action Arms UZI Type Assault Gun, Serial Number SA40430.

Page 1

378 S.E.2d 1

324 N.C. 276, 52 Ed. Law Rep. 764

The STATE of North Carolina, ex rel. Lacy H. THORNBURG Attorney General v. CURRENCY IN THE AMOUNT OF $52,029.00 IN U.S. CURRENCY; One (1) 1976 Four Door Cadillac Seville automobile, Vehicle Identification Number 6S69R6Q498436; One (1) Smith & Wesson 44 Magnum Pistol, Model 29-3, Serial Number LB5425; and One (1) Action Arms UZI Type Assault Gun, Serial Number SA40430.

No. 7PA88.

Supreme Court of North Carolina.

April 5, 1989.

Lacy H. Thornburg, Atty. Gen. by Jean A. Benoy, Sr. Deputy Atty. Gen., and Charles M. Hensey, Sp. Deputy Atty. Gen., Raleigh, for the State-appellant.

Ridge & Associates by Paul H. Ridge and David K. Holley, Graham, for intervenor-appellee Alamance County Bd. of Educ.

Allen & Walker by Louis C. Allen, Jr., Burlington, for intervenor-appellee Burlington City Bd. of Educ.

Lacy H. Thornburg, Atty. Gen. by Harold M. White, Jr., Associate Atty. Gen., Office of Sp. Litigation, Raleigh, amicus curiae.

MEYER, Justice.

In this case, we consider whether the criminal forfeiture provisions of the Controlled Substances Act take precedence over the civil forfeiture provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO) where the possessor of the items seized and subject to forfeiture has been validly indicted and awaits criminal trial under the Controlled Substances Act. Limiting our decision to the specific fact situation presented here, we conclude that the forfeiture provisions of the Controlled Substances Act prevail. We also consider whether Judges Battle and Brewer respectively erred in extending the time for serving the proposed record on appeal ex parte and in denying the intervenors' motion to dismiss this appeal. We conclude that the trial judges did not err.

On 11 December 1986, the male occupant of a room at the Econo Lodge Motel in Graham, North Carolina, had failed to check out in timely manner. The motel manager, who had tried unsuccessfully to rouse the occupant by telephone, used his master key to gain access to the room. He observed the sleeping occupant on one bed and a handgun on the other bed. The manager called the Graham Police Department. As the three officers who responded to the call passed the window of the occupied room, one of them observed drug paraphernalia in plain view. The officers entered the room, awakened the occupant, arrested and handcuffed him and advised him of his constitutional rights. The officers then searched the room, discovering among other things, $52,029 in United States currency, a Smith and Wesson magnum .44-caliber pistol, an Action Arms "UZI" type assault machine gun, and 105 grams of cocaine. The occupant identified as his a Cadillac automobile with a Nevada license tag parked in the motel lot. He had a driver's license in the name of Michael Lawrence Short, but he was later identified as Larry Wendle Parham. Parham admitted owning the $52,029, which he described as the proceeds from a drug sale. He told the officers that he traveled between Florida and Graham, North Carolina, on a weekly basis, picking up cocaine in Florida and selling it in North Carolina. Parham was subsequently charged with one count of felony trafficking by possession of cocaine (level one), one count of felony trafficking by possession of cocaine (level three), and one count of maintaining a vehicle for transporting controlled substances.

On 23 December 1986, the State of North Carolina, on the relation of Lacy H. Thornburg, Attorney General, filed a document entitled "Complaint In Rem RICO Forfeiture Proceeding," pursuant to N.C.G.S. § 75D-5(a), which named as defendants the $52,029, the Cadillac automobile, the pistol and the assault gun. A copy of the complaint was served on Larry Parham the same day. Parham never filed answer or otherwise appeared. On 19 January 1987, an order of seizure was entered under the RICO Act directing the Sheriff of Alamance County to seize, attach and keep the currency, automobile and guns in a safe place. On 21 January 1987, 4 May 1987, and 6 May 1987, orders were entered respectively allowing the City of Graham, the Alamance County Board of Education and the Burlington City Board of Education (school boards) to intervene and file answer. In its answer, the City of Graham asked that the proceeds of the seized property, when forfeited, be paid to its Police Department pursuant to the RICO Act. In their answers, the two school boards demanded the proceeds be paid to the school fund of Alamance County pursuant to article IX, section 7 of the North Carolina Constitution, which provides in part that the clear proceeds of all penalties and forfeitures collected for any breach of the penal laws shall be used for maintaining the public schools.

On 8 June 1987, the case was heard for entry of final judgment of forfeiture. Upon completion of the State's evidentiary showing, the trial judge considered trial briefs and oral argument presented by all parties. The trial judge made findings of fact and concluded as a matter of law

(1) That the property described in the complaint is subject to forfeiture under Chapter 75D of the North Carolina General Statutes.

(2) That it appears to the Court that the property ... is subject to forfeiture under the North Carolina Controlled Substances Act, upon a final conviction of the said Larry Parham in the cases now pending in Alamance County Superior Court against said defendant.

(3) That the amount of the forfeiture pursuant to Chapter 75D of the General Statutes cannot be determined in this action until the criminal actions pending against Larry Parham are completed and any forfeitures ordered under the Controlled Substances Act shall have taken place.

(4) That the provisions of Chapter 75D of the General Statutes are secondary to the criminal forfeiture provision of the Controlled Substances Act, North Carolina General Statutes Section 90-112, which applies to these properties.

(5) The Court concludes as a matter of law that any property received at the appropriate time by and forfeited to the State Treasurer under General Statutes Chapter 75D must thereafter be passed on by the State Treasurer to the treasurer or proper officer authorized to receive fines and forfeitures to be used for the school fund of Alamance County in accordance with the provisions of North Carolina Constitution Article IX, Section 7.

After the entry of an order pursuant to these findings, the Burlington City Board of Education filed a motion for forfeiture pursuant to the Controlled Substances Act in the three criminal cases pending against Larry Parham. The State and the City of Graham gave notice of appeal. On 9 March 1988, this Court allowed the State's petition for discretionary review prior to determination by the Court of Appeals.

I.

The Racketeer Influenced and Corrupt Organizations Act, codified at N.C.G.S. ch. 75D, became effective 1 October 1986 and will expire 1 October 1989. 1985 N.C. Sess. Laws ch. 999 § 3. "Racketeering activity" is defined in part as follows:

[T]o commit, to attempt to commit, or to solicit, coerce, or intimidate another person to commit an act or acts which would be chargeable by indictment if such act or acts were accompanied by the necessary mens rea or criminal intent under the following laws of this State:

a. Article 5 of Chapter 90 of the General Statutes of North Carolina relating to controlled substances and counterfeit controlled substances.

N.C.G.S. § 75D-3(c)(1) (1987). Under the section entitled "Prohibited activities":

(a) No person shall:

(1) engage in a pattern of racketeering activity or, through a pattern of racketeering activities or through proceeds derived therefrom, acquire or maintain, directly or indirectly, any interest in or control of any enterprise, real property, or personal property of any nature, including money; or

(2) conduct or participate in, directly or indirectly, any enterprise through a pattern of racketeering activity whether indirectly, or employed by or associated with such enterprise; or

(3) conspire with another or attempt to violate any of the provisions of subdivision (1) or (2) of this subsection.

N.C.G.S. § 75D-4(a) (1987).

A RICO forfeiture proceeding is a civil in rem proceeding against property, which is instituted by complaint and prosecuted only by the Attorney General of North Carolina or his designated representative. N.C.G.S. § 75D-5(c), (d) (1987). Section 75D-5(a) provides:

All property of every kind used or intended for use in the course of, derived from, or realized through a racketeering activity or pattern of racketeering activity is subject to forfeiture to the State.

N.C.G.S. § 75D-5(a) (1987) (emphasis added). The statute specifically provides:

Civil remedies under this Chapter are cumulative, supplemental and not exclusive, and are in addition to the fines, penalties and forfeitures set forth in a final judgment of conviction of a violation of the criminal laws of this State as punishment for violation of the penal laws of this State.

N.C.G.S. § 75D-10 (1987) (emphasis added).

The Controlled Substances Act is codified in chapter 90, article 5 of the North Carolina General Statutes. Criminal violations of the Act and the penalties therefor are set out in section 90-95. N.C.G.S. § 90-95 (1985). Under section 90-112(a), the following property is subject to forfeiture:

(1) All controlled substances which have been manufactured, distributed, dispensed, or acquired in violation of the provisions of this Article;

(2) All money, raw material, products, and equipment of any kind which are acquired, used, or intended for use, in selling, purchasing, manufacturing, compounding, processing, delivering, importing, or exporting a controlled substance in violation of the provisions of this Article;

(3) All property which is used, or intended for use, as a container for property described in subdivisions (1) and (2);

(4) All conveyances, including...