United States v. Burch

Decision Date24 August 1961
Docket NumberNo. 18679.,18679.
Citation294 F.2d 1
PartiesUNITED STATES of America, Appellant, v. Howell F. BURCH, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

William C. Calhoun, U. S. Atty., William T. Morton, Asst. U. S. Atty., Augusta, Ga., for appellant.

Carl K. Nelson, Dublin, Ga., for appellee.

Before JONES and BROWN, Circuit Judges, and CONNALLY, District Judge.

JOHN R. BROWN, Circuit Judge.

This case involving the seizure and condemnation of property allegedly used in the manufacture of illicit whiskey raises one primary question for our consideration. That is whether an earlier acquittal of Burch in a criminal prosecution involving possession of the same property made the subject of this libel of forfeiture operates as a bar to the present action on principles of res judicata, or more properly collateral estoppel. Consideration of this question, though, branches into two distinct inquiries. First, whether the fact that the criminal prosecution was terminated on a motion for judgment of acquittal based on lack of evidence to connect appellee with the conspiracy makes collateral estoppel ineffective as a bar as to this action. Second, whether the forfeiture statute is remedial or punitive in nature and the effect that inquiry has on the availability of collateral estoppel as a defense.

This forfeiture proceeding originated as a libel in rem against 307 bags of sugar under 26 U.S.C.A. § 7302 in the Southern District of Georgia. The libel alleged that Burch had possessed this large quantity of sugar with the purpose and intent that it be used in the manufacture of illicit whiskey in violation of 26 U.S.C.A. § 5686(b). Burch filed a claim to the sugar. While the forfeiture proceeding was pending in Georgia, Burch was indicted, along with 15 others, in the Southern District of Florida for unlawfully conspiring to violate the internal revenue laws by manufacturing, possessing, selling, etc., illicit whiskey.1 Sixty-nine overt acts were alleged at least three of which related to the acquisition, transportation and storage of the identical sugar which is the subject matter of the present forfeiture action.

On the trial of the criminal action in Florida the District Judge granted a motion for judgment of acquittal made by Burch. The motion under F.R.Crim. P. 29(a), 18 U.S.C.A. was based on the total lack of proof connecting Burch with the conspiracy. Thereafter, Burch amended his answer in the forfeiture proceeding in Georgia raising the defense of res judicata and setting forth the indictment and judgment of acquittal in the criminal case. Pursuant to this plea he filed a motion for summary judgment. The District Court granted the motion from which the Government brings this appeal.

In the trial court, and here, Burch rests on Coffey v. United States, 1886, 116 U.S. 436, 6 S.Ct. 437, 29 L.Ed. 684. On that approach there are two subsidiary inquiries. They may appear to be separate, but as both are concerned in a way with the Coffey case and especially the manner in which it is treated and distinguished by later cases, they are closely related. The first inquiry concerns the nature of the forfeiture proceeding as criminal or civil, punitive or remedial. The second relates directly to the vitality of Coffey as a controlling precedent.

A libel of forfeiture under 26 U.S.C.A. § 7302 is, nominally, at least, a civil action. This is not, of course, determinative of its true nature — that is, whether the action is really civil as opposed to criminal, or as it is sometimes expressed remedial rather than punitive. The distinction may be of decisive importance. If the forfeiture action is criminal (punitive) then a determination in the one might bar re-examination of the same issue in the other. On the other hand, if it is a civil, that is remedial, suit there is considerable doubt that res judicata would act as a bar to the maintenance of it. This is so because an acquittal in a criminal action is considered "merely * * * an adjudication that the proof was not sufficient to overcome all reasonable doubt of the guilt of the accused." Helvering v. Mitchell, 1938, 303 U.S. 391, at page 397, 58 S.Ct. 630, 632, 82 L.Ed. 917. As to the issues raised, it does not constitute an adjudication on the preponderance-of-the-evidence test which applies in civil proceedings.2 United States v. National Ass'n of Real Estate Boards, 1950, 339 U.S. 485, 492-494, 70 S.Ct. 711, 94 L.Ed. 1007; United States v. One 1953 Oldsmobile 98 4 Door Sedan, 4 Cir., 1955, 222 F.2d 668, at page 673; see 30A Am. Jur., Judgments § 472 et seq. at 512.

This approach would require that we categorize this particular action, at least for the purposes of this inquiry, as civil (remedial) or criminal (punitive) in nature. Under the existing case law, this is a none too easy task.

Save for a few carefully delineated areas, it is not at all clear what, if any, suits for forfeiture of property, or for payment of multiple damages to the Government should more properly be regarded as punitive rather than civil. However, the weight of authority seems to support the proposition that forfeiture in rem actions, such as the present one, are essentially civil in nature, and should not be burdened with the attributes of a criminal action. Various Items of Personal Property v. United States, 1931, 282 U.S. 577, 580, 51 S.Ct. 282, 75 L.Ed. 558; Helvering v. Mitchell, supra, 303 U.S. 391, at page 400, 58 S.Ct. 630; United States v. 42 Jars, etc., D.C.D.N.J.1958, 160 F. Supp. 818, at page 821; United States v. 20 Strings Seed Pearls, D.C.S.D.N.Y.1929, 34 F.2d 142; but see United States v. 38 Cases, etc., D.C.S.D.N.Y.1951, 99 F. Supp. 460, at page 464. But the standards by which this question is to be determined are not entirely clear. One factor emphasized as important is the existence of express criminal penalties for the same wrongful act within the same statutory scheme imposing the sanction of forfeiture. United States ex rel. Marcus v. Hess, 1943, 317 U.S. 537, at page 549, 63 S.Ct. 379, 87 L.Ed. 443; United States v. 38 Cases, etc., D.C.S.D.N.Y. 1951, 99 F.Supp. 460, at page 463. This, some courts reason, demonstrates legislative intent that the additional forfeiture or payment provisions are meant only to compensate the Government for its loss or to protect some aspect of the public interest from future harm. Of significance too may be the relationship between the harm suffered by the Government and the loss to the claimant from the forfeiture. United States ex rel. Marcus v. Hess, supra, 317 U.S. 537, at page 554, 63 S.Ct. 379 (concurring); Helvering v. Mitchell, supra, 303 U.S. 391, at page 401, 58 S.Ct. 630. The intrinsic nature of the enforcement procedures prescribed in the statute are also relevant factors in this regard. Helvering v. Mitchell, supra, 303 U.S. 391, at page 402, 58 S.Ct. 630.

That brings us to the second inquiry concerning the binding character today of the Coffey decision.

Burch correctly emphasizes that the facts of Coffey are indeed quite similar to his. A suit was instituted for the forfeiture of certain materials allegedly used to violate the liquor laws. Subsequently a criminal action based on the same facts was prosecuted by a trial before a jury. The jury returned a general verdict of not guilty and judgment of acquittal was entered. The forfeiture proceedings were later reopened resulting in a judgment for the Government. On appeal, the Supreme Court ordered the libel dismissed holding that the criminal action barred a suit for forfeiture based on the same facts.

The Coffey decision has been the subject of a great deal of controversy, and no little criticism. See, e. g., United States ex rel. Marcus v. Hess, supra, 317 U.S. 537, at page 554, 63 S.Ct. 379. As the Third Circuit characterized it, the case has received a distinctly "unfavorable press." United States v. One Dodge Sedan, 3 Cir., 1940, 113 F.2d 552, at page 553 and notes 1 and 2. In a figure indigenous to the usual assertion of it the Fourth Circuit remarked, "A lot of water has gone over the dam, and a great deal of whiskey has come from the stills since the Coffey decision nearly seventy years ago." United States v. One 1953 Oldsmobile 98 4 Door Sedan, 4 Cir., 1955, 222 F.2d 668, at page 670. Both cases expressed considerable doubt as to the continued vitality of Coffey but happily found distinguishing factors to avoid either its doctrine or a determination of its current force. Other courts have shown a similar reluctance to apply literally the holding of Coffey. United States v. One DeSoto Sedan, D.C.E.D.N.C.1949, 85 F.Supp. 245; United States v. Gramer, 9 Cir., 191 F.2d 741, 27 A.L.R.2d 1132; United States v. One 1951 Cadillac Coupe DeVille, D.C.W.D.Pa.1952, 108 F. Supp. 286; United States v. Physic, 2 Cir., 1949, 175 F.2d 338; United States v. 20 Strings Seed Pearls, D.C.S.D.N.Y. 1929, 34 F.2d 142.

On the other hand, Coffey has at various times been applied by other courts. The Tenth Circuit is apparently committed to the proposition that it still exists as the controlling authority in these cases. United States v. One 1956 Ford Fairlane Tudor Sedan, 10 Cir., 1959, 272 F.2d 704. On other occasions courts without an examination of the merits of the doctrine and the case law that it has generated have applied it on principles of stare decisis. This is illustrated by the opinion of the Fourth Circuit just five years before its recent expression quoted above. United States v. One DeSoto Sedan, 4 Cir., 1950, 180 F.2d 583.

Burch echoes what these Courts point out. Attacked and critized as it is, the fact remains that Coffey has never been expressly overruled by the Court which handed it down.3 It must be recognized though that on several occasions it has been distinguished on rather fine grounds by that Court. Helvering v. Mitchell, supra, 303 U.S. 391, at page 405-406, 58 S.Ct. 630; Murphy v. United States, 1926, 272 U.S. 630, at page 631, 47 S.Ct. 218, 71...

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