United States v. Jenison

• Decision Date: 15 January 1980
• Docket Number: Civ. A. No. 78-0249.
• Citation: 484 F. Supp. 747
• Parties: UNITED STATES of America v. Joel W. JENISON; City of Warwick, Rhode Island; Fairlawn Credit Union; Lum Realty, Inc.; Grinnell Employees Credit Union; Greater Providence Deposit Corp.; L. Vaughn Company; Industrial National Bank; B. M. C. Durfee Trust Co.; Old Stone Bank; Majestic Hardware Company.
• Court: U.S. District Court — District of Rhode Island

484 F. Supp. 747

UNITED STATES of America v. Joel W. JENISON; City of Warwick, Rhode Island; Fairlawn Credit Union; Lum Realty, Inc.; Grinnell Employees Credit Union; Greater Providence Deposit Corp.; L. Vaughn Company; Industrial National Bank; B. M. C. Durfee Trust Co.; Old Stone Bank; Majestic Hardware Company.

Civ. A. No. 78-0249.

United States District Court, D. Rhode Island.

January 15, 1980.

COPYRIGHT MATERIAL OMITTED

Paul F. Murray, U. S. Atty., Everett C. Sammartino, Asst. U. S. Atty., Providence, R. I., Louis J. Lombardo, Tax Div., Dept. of Justice, Washington, D. C., for plaintiff.

Kevin A. McKenna, Peter K. Rosedale, Anthony Vacca, John A. DeSano, Providence, R. I., Henry H. Katz, Pawtucket, R. I., Richard S. Mittleman, Justin S. Holden, Edwin H. Hastings, Thomas W. Heald, Providence, R. I., William J. Toohey, City Sol., Warwick, R. I., Merrill W. Sherman, John F. Bomster, Providence, R. I., for defendants.

OPINION

PETTINE, Chief Judge.

This is an action by the United States to enforce its tax liens against a fund of money seized from the defendant Joel W. Jenison by the City of Warwick police. The City claims the fund by right of forfeiture. The remaining defendants are private creditors who caused attachment writs to be served against the fund.

The United States has filed a motion for summary judgment seeking a determination that the City of Warwick has no valid claim against the fund and an adjudication as to the priorities of its various liens against the fund. The government also seeks judgment as to the distribution of the fund to three of the private creditors: Grinnell Employees Credit Union (hereinafter Grinnell), L. Vaughn Co., and Majestic Hardware, Inc. L. Vaughn, Majestic Hardware, and Joel Jenison have joined in the motion for summary judgment; the remaining private creditors, Fairlawn Credit Union (hereinafter Fairlawn), Lum Realty, Inc., Greater Providence Deposit Corporation (hereinafter GPDC), Industrial National Bank, B. M. C. Durfee Trust (hereinafter B. M. C.), and Grinnell join in the motion for summary judgment insofar as it seeks adjudication of the forfeiture claim of the City of Warwick, but object to the balance of the motion.¹ The City of Warwick objects to the motion insofar as it concerns the City's forfeiture claim.

In addition to the government's claim, a number of the private creditors have filed various counterclaims and cross claims asking the Court to determine priority among the private creditors.²

I STATEMENT OF THE FACTS

On August 14, 1977, the Warwick Police Department arrested a number of persons allegedly involved in a drug conspiracy. One of those arrested was the defendant Joel Jenison from whom $151,899.11 in cash was seized.³ The seized monies were deposited in a savings account by the City of Warwick and as of July 1, 1979, the interest earned on this account has been $24,753.

Jenison had a number of private creditors who caused writs of attachment to be placed on the fund.⁴ In addition, the United States became a creditor of Jenison as a result of his failure to pay federal income taxes. The Internal Revenue Service made assessments against Jenison for the taxable year ending August 31, 1977 ($49,948.00) and the taxable years 1975 ($30,909.00) and 1976 ($211,724.00).⁵ Notices of levy were served upon the City of Warwick on September 12, 1977 for the 1977 taxes and on December 8, 1977 for the 1975 and 1976 taxes demanding that all property belonging to taxpayer Jenison in the City's possession be surrendered to the United States. The City has refused to honor these levies claiming that it is entitled to retain the monies pursuant to the provisions of R.I. G.L. § 21-28-5.05 relating to forfeitures.

In addition to the notices of levy, the United States filed notices of lien as follows: notice of lien for taxable year 1977 filed in Warwick, Rhode Island on September 12, 1977 and in Broward County, Florida on November 26, 1977; notices of lien for taxable years 1975 and 1976 filed in Warwick, Rhode Island on December 12, 1977 and in Broward County, Florida on January 5, 1978. The notices of lien were filed in both Rhode Island and Florida because of a dispute as to Jenison's place of residence.

The United States claims a priority right to the fund over all the private creditors except Grinnell, L. Vaughn, and Majestic based on its service of the various notices of levy and filings of the various notices of lien.

II THE CITY OF WARWICK'S FORFEITURE CLAIM

The City of Warwick relies on the Controlled Substances Act, R.I.G.L. § 21-28-5.05,⁶ to support its forfeiture claim. This statute enumerates various items that are subject to forfeiture to the State, including all illegally manufactured or distributed controlled substances, all related raw materials and equipment, and all books, records and research connected with the sale or manufacture of such controlled substances. If the money seized from Jenison was properly forfeited under the statute, then neither the United States nor the private creditors could acquire a valid lien on Jenison's interest in the fund since title to the money would have passed to the City immediately upon seizure.

A. Abstention

Because the relevant statute involves questions of applicability not previously resolved by Rhode Island courts and because such resolution might avoid the present litigation, the City of Warwick urges that the Court abstain from rendering a decision at this time. The mere fact that state law is unsettled, however, is not sufficient to mandate abstention. As Chief Justice Stone explained in Meredith v. City of Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9 (1943):

The difficulties of ascertaining what the state courts may hereafter determine the state law to be do not in themselves afford a sufficient ground for a federal court to decline to exercise its jurisdiction to decide a case which is properly brought to it for decision.

. . . . .

Congress having adopted the policy of opening the federal courts to suitors in all diversity cases involving the jurisdictional amount, we can discern in its action no recognition of a policy which would exclude cases from the jurisdiction merely because they involve state law or because the law is uncertain or difficult to determine. . . . To remit the parties to the state courts is to delay further the disposition of the litigation which has been pending for more than two years and which is now ready for decision. It is to penalize petitioners for resorting to a jurisdiction which they were entitled to invoke, in the absence of any special circumstances which would warrant a refusal to exercise it. Id. at 234, 236-37, 64 S.Ct. at 11, 12.

Special circumstances do exist in which abstention is appropriate or even mandatory, but the City has failed to present any evidence that the present matter constitutes one of those cases. Under the Pullman doctrine, for instance, a federal court should refrain from deciding a case in which state action is challenged as contrary to the federal constitution if there are unsettled questions of state law that may be dispositive of the case and avoid the need for deciding the constitutional question. Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941); see 17 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4242. Since the instant case does not involve the constitutionality of the state forfeiture statute, the Court can see no way in which the Pullman doctrine can be applied to this case.

Another instance in which abstention is appropriate is when a similar action is already pending in state court. See Wright, Miller & Cooper, supra, at § 4246. In such a case, the federal court can choose to postpone decision for a time to await the opinion of the state court. Even so, the decision to postpone adjudication is a discretionary one and the Court must consider such factors as the possible delay, the relative difficulty of estimating what the state court would decide, and the importance to the case of a state court determination. Since the City of Warwick has not produced evidence of any case pending before a state court that involves the Rhode Island forfeiture statute,⁷ the Court has no basis to abstain.⁸

B. The forfeiture statute

The United States challenges the City's reliance on the Rhode Island forfeiture statute on three grounds: the State of Rhode Island and not the City of Warwick is the appropriate entity to enforce the forfeiture provisions of the statute; money is not an item subject to forfeiture under the statute; and no forfeiture proceeding has been initiated as required by the statute. Since the Court agrees with the government's second contention, there is no need to discuss the merits of the plaintiff's other two arguments.

Because forfeitures of property are drastic remedies, forfeiture statutes are strictly construed against forfeiture and in favor of the person whose rights are affected. Kane v. McDaniel, 407 F.Supp. 1239, 1242 (W.D.Ky.1975). This policy makes sense, since forfeitures are not punishment for criminal activity, but rather an exercise of the police power of a state to confiscate property that was instrumental in a crime so as to prevent the continuance of unlawful acts. Id. Though some articles such as counterfeit money, narcotics, or dangerous weapons are contraband by their very nature, other articles, such as large sums of money, acquire that status only if their possession or receipt is substantially and instrumentally related to illegal behavior. See United States v. Bowdach, 414 F.Supp. 1346, 1353 (S.D.Fla.1976). As Judge Bownes pointed out in United States v. One 1972 Datsun, 378 F.Supp. 1200 (D.N.H. 1974),

Unlike the seizure of per se contraband, "the possession of which, without more, constitutes a crime," and the seizure of which directly promotes the remedial goals of a forfeiture scheme, seizure of

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