U.S. v. One Lot of $25,721.00 in Currency

• Decision Date: 05 April 1991
• Docket Number: 90-2170,Nos. 90-1688,s. 90-1688
• Parties: , 20 Fed.R.Serv.3d 1152 UNITED STATES of America, Plaintiff, Appellee, v. ONE LOT OF $25,721.00 IN CURRENCY, Defendant, Appellee, John Mele, Claimant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1417

938 F.2d 1417

60 USLW 2094, 20 Fed.R.Serv.3d 1152

UNITED STATES of America, Plaintiff, Appellee, v. ONE LOT OF $25,721.00 IN CURRENCY, Defendant, Appellee John Mele, Claimant, Appellant.

Nos. 90-1688, 90-2170.

United States Court of Appeals First Circuit.

Heard April 5, 1991.

Decided July 16, 1991.

Kevin S. Nixon with whom Henry F. Owens, III and Owens & Associates were on brief, Boston, Mass., for claimant, appellant.

Christopher F. Bator, Asst. U.S. Atty., with whom Roberta T. Brown, Asst. U.S. Atty. and Wayne A. Budd, U.S. Atty., were on brief, Boston, Mass., for appellee.

Before BREYER, Chief Judge, BOWNES, Senior Circuit Judge, and TORRUELLA, Circuit Judge.

BOWNES, Senior Circuit Judge.

This is a civil forfeiture case. Claimant-appellant John Mele appeals from a summary judgment awarding the government $25,721 in United States currency. ¹

There are three issues: (1) whether we have jurisdiction to hear the appeal; (2) whether the district court abused its discretion in denying claimant's motion for relief of judgment invoking Fed.R.Civ.P. 60(b)(1) and (b)(6); and (3) whether the government's motion for summary judgment was properly granted.

I. JURISDICTION

In a recent case we evaded the question of jurisdiction. United States v. Parcel of Land With Building, Appurtenances and Improvements, Known as Woburn City Athletic Club, Inc., 928 F.2d 1, 3-4 (1st Cir.1991). The time has now come to bite the bullet. We start our bite with the pertinent facts. A final judgment as to the currency was entered by the district court on May 23, 1990. There was no attempt by claimant to obtain a stay of judgment. On June 13, 1990, more than ten days after the expiration of the automatic ten-day stay of execution mandated by Fed.R.Civ.P. 62(a), the United States Marshal executed the judgment and deposited the currency in the United States Department of Justice Asset Forfeiture fund.

The government's position, if followed, would easily and quickly dispatch the case. It asserts that the execution of the judgment has two inevitable and unalterable results: it deprives the district court of jurisdiction to grant claimant relief from judgment under Fed.R.Civ.P. 60(b); and it extinguishes appellate jurisdiction.

We must acknowledge that the government has followed the generally accepted civil forfeiture procedure, which is based on the ancient admiralty rule that where the res has been removed from the jurisdiction of the court, there is no in rem jurisdiction. See United States v. One Lear Jet Aircraft, Ser. No. 35A-280, 836 F.2d 1571, 1573 (11th Cir.), cert. denied, 487 U.S. 1204, 108 S.Ct. 2844, 101 L.Ed.2d 881 (1988). The theory is that because a civil forfeiture action is an action in rem, not in personam, jurisdiction of the court depends on its control over the res. United States v. Tit's Cocktail Lounge, 873 F.2d 141, 143 (7th Cir.1989); United States v. $2,490.00 in U.S. Currency, 825 F.2d 1419, 1420 (9th Cir.1987). A claimant can keep the res within the control of the district court by obtaining a stay of the district court judgment pending appeal; this requires the posting of a supersedeas bond under Fed.R.Civ.P. 62(b). See United States v. $2,490 in U.S. Currency, 825 F.2d at 1420; United States v. 66 Pieces of Jade & Gold Jewelry, 760 F.2d 970, 973 (9th Cir.1985). As noted, no stay was sought here.

The Seventh, Ninth, Eleventh and Fifth Circuits follow the rule that where there has been no stay of the judgment, executing it removes the res from the control of the court and jurisdiction in both the district and appellate courts is extinguished. See United States v. Tit's Cocktail Lounge, 873 F.2d at 142-43 (failure to obtain stay and sale of properties after forfeiture divests court of appellate jurisdiction); United States v. Ten Thousand Dollars in U.S. Currency, 860 F.2d 1511, 1513 (9th Cir.1988) ("in an in rem action, removal of res ends the jurisdiction of the court"; judgment had been executed and cash released to government); United States v. One Lear Jet Aircraft, 836 F.2d at 1573 (no stay of judgment, removal of forfeited plane from territorial jurisdiction of court destroyed court's jurisdiction); United States v. $79,000 in U.S. Currency, 801 F.2d 738, 740 (5th Cir.1986) (no stay, monies released to Customs ten days after judgment--no jurisdiction).

The Second and Fourth Circuits have refused to sail by the admiralty rule. The decisions in both of these circuits rely heavily on the dissents in One Lear Jet Aircraft, 836 F.2d at 1577-1584, particularly that of the late Judge Vance. One Lear Jet Aircraft was an en banc opinion, decided on a six to five vote. We, therefore, first examine the dissents in that case. Judge Vance's main theme was that it was unfair "to utilize a defective legal fiction to essentially cut off any right of appeal...." Id. at 1578-79. He pointed out: "Forfeiture actions are unique in that they are the only proceedings where the government may confiscate private property on a mere showing of probable cause. For this court to eliminate the right of appeal, the most important safeguard against abuse, is indeed a drastic step." Id. at 1578. Judge Clark attacked the majority's application of a rule "predicated upon the admiralty fiction that a ship is a person against whom suits can be filed and judgments entered." Id. at 1580. He pointed out that even in admiralty cases the rule had lost much of its vitality and exceptions had been developed for the use of in personam jurisdiction. Id. at 1580-82. Both judges were of the opinion that the court had in personam jurisdiction over the United States. Id. at 1578 (Vance); Id. at 1583 (Clark).

In United States v. Aiello, 912 F.2d 4 (2d Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 757, 112 L.Ed.2d 777 (1991), the Second Circuit adopted the position of the dissenters in One Lear Jet. It held that the admiralty fiction of treating a ship as a person should not be invoked to deny appellate review of forfeiture judgments. It also agreed with Judge Vance that by bringing suit the United States submitted itself to the jurisdiction of the court and should not be allowed to evade appellate review. Id. at 6-7.

The Fourth Circuit has wholeheartedly embraced the position of the dissenters in One Lear Jet. It held:

We conclude that invocation of the in rem rule is particularly inapposite to defeat jurisdiction in a government-initiated civil forfeiture action. As noted by Judge Vance in One Lear Jet, "[f]orfeiture actions are unique in that they are the only proceedings where the government may confiscate ... to [then] eliminate the right of appeal, the most important safeguard against abuse, is indeed a drastic step." 836 F.2d at 1578 (Vance, J., dissenting). Unlike the typical case where the defendant ship stealthily absconds from port and leaves the plaintiff with no res from which to collect, here the defendant res is in the possession of the United States and thus in no danger of disappearing. Because the res is unlikely to disappear, we see no reason to require the claimant to file a stay of execution or a supersedeas bond in a civil forfeiture action, because such bonds are typically filed to protect the interests of the party that prevailed in the district court. Having prevailed below, the government, if it wins on appeal, is assured of execution regardless of whether [the claimant] files a bond or stays execution of the judgment.

United States v. $95,945.18, U.S. Currency, 913 F.2d 1106, 1109 (4th Cir.1990) (footnotes omitted). The Fourth Circuit also agreed with the dissenters in One Lear Jet, "that by initiating the forfeiture proceeding in the district court, the government has subjected itself to this court's in personam jurisdiction." Id.

We are persuaded by the dissenters in One Lear Jet and the Second and Fourth Circuits that the time has come to jettison the "no res, no jurisdiction" rule. There is no good reason why the government should be allowed to insulate itself from the appellate process by wrapping itself in the mantle of an admiralty fiction designed at an earlier time to meet a problem totally unrelated to present day civil forfeiture proceedings. Jurisdiction based on the location of the res is particularly inapposite to a currency forfeiture case. The government has possession and control of the currency from the time it seizes it. The execution of the judgment merely transfers it from one government pocket to the other. Basing jurisdiction on what pocket contains the currency is nothing more than a shell game. In addition to being bereft of logic it is also unfair. As Judge Clark pointed out in One Lear Jet: "In other types of proceedings, when a judgment for property is rendered, the losing party has a choice. He need not post a bond. He can still appeal the judgment. If he wins on appeal, he can bring an action to recover his property or its value." 836 F.2d at 1584.

In Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 80 S.Ct. 1470, 4 L.Ed.2d 1540 (1960), the Court did not hesitate to deep-six this admiralty fiction when it was used to thwart the doctrine of forum non conveniens:

The fiction relied upon has not been without its critics even in the field it was designed to serve. It has been referred to as "archaic," "an animistic survival from remote times," "irrational" and "atavistic." Perhaps this is going too far since the fiction is one that certainly had real cause for its existence in its context and in the day and generation in which it was created. A purpose of the fiction, among others, has been to allow actions against ships where a person owning the ship could not be reached, and it can be very useful for this purpose still. We are asked here, however, to transplant this ancient salt-water admiralty fiction into the dry-land context of forum non conveniens, where its usefulness and possibilities for good are questionable at best. In fact, the fiction appears to have...