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UNITED STATES v. $5

April 22, 1968

UNITED STATES of America, Libellant,
v.
$5,372.85 UNITED STATES COIN AND CURRENCY: One Check in the Sum of $24.00, Drawn on the Chemical Bank-New York Trust Company, Issued by Sandow Holman, Payable to Cash



The opinion of the court was delivered by: WYATT

WYATT, District Judge.

 This is a proceeding in rem by the Government under 26 U.S.C. § 7323(a) to enforce a forfeiture of property seized by Government agents and claimed to be subject to forfeiture under 26 U.S.C. § 7302. The property seized is $5,372.85 in United States coins and currency together with a check in the sum of $24 drawn on Chemical Bank New York Trust Company, issued by Sandow Holman and payable to cash.

 This Court has jurisdiction under 26 U.S.C. §§ 7302, 7323 and 28 U.S.C. §§ 1345 and 1355.

 The claim of the Government is that the property was used or intended to be used in violating the internal revenue laws against carrying on a gambling business without paying the special tax (26 U.S.C. § 4411) and without registering (26 U.S.C. § 4412).

 It is unlawful to "possess any property intended for use in violating * * * the internal revenue laws, or which [property] has been so used". 26 U.S.C. § 7302. Such property, by the same section, is subject to seizure and forfeiture. Forfeiture is enforced by "a proceeding in rem" (26 U.S.C. § 7323; see also 28 U.S.C. §§ 1345, 1355). The statute does not specify the procedure to be followed in such proceeding.

 A proceeding to enforce a forfeiture is a civil one, and not a criminal proceeding. Ames v. State of Kansas, 111 U.S. 449, 460-461, 4 S. Ct. 437, 28 L. Ed. 482 (1884).

 In this country the earliest forfeiture proceedings for violation of law appear to have involved maritime matters, such as imporation of goods by vessel contrary to law (The Hoppet, 7 Cranch 389, 11 U.S. 389, 3 L. Ed. 380 (1813)) or using a vessel in the slave trade which trade was contrary to law (The Emily, 9 Wheat. 381, 22 U.S. 381, 6 L. Ed. 116 (1824)). The pleading to initiate the proceeding was early called an "information", doubtless because it charged a criminal offense and "information" since before the time of Blackstone was an accusation exhibited against a person for some crime (4 Blackstone Com. 308).

 An early statute providing for forfeiture directed that the proceeding should be by "action of debt, indictment or information". A proceeding was commenced on the admiralty side, to which it was objected that it should have been at common law because debt, indictment, and information referred to common law remedies. But Chief Justice Marshall held that "information" had no exclusive application to common law because a "libel, on a seizure" was "in its terms and in its essence * * * an information". The Samuel, 1 Wheat. 9, 13, 14 U.S. 9, 13, 4 L. Ed. 23 (1816). The pleading initiating a proceeding in admiralty for a forfeiture came frequently to be called "a libel of information" as by Justice Story in The Palmyra, 12 Wheat. 1, 7, 25 U.S. 1, 7, 6 L. Ed. 531 (1827).

 As statutes provided for forfeitures in other than maritime causes, the practice followed was to commence the proceedings in admiralty by a "libel of information" and for claimants to file claims under the admiralty practice for the property in question. The Supreme Court Admiralty Rules (now rescinded) dealt specifically (Rule 21) with "informations and libels of information upon seizures for any breach of the revenue * * * or other laws of the United States". Supreme Court Admiralty Rule 21 required that a libel of information state the place of seizure, whether on "land" or on "navigable waters". This is because in forfeiture proceedings, if the seizure was on land the proceeding - after jurisdiction obtained by libel of information in rem - was that of an action at law, with right of jury trial, etc. 443 Cans of Frozen Egg Product v. United States, 226 U.S. 172, 180-183, 33 S. Ct. 50, 57 L. Ed. 174 (1912).

 When the Federal Rules of Civil Procedure first became effective on September 16, 1938, Rule 81(a)(2) provided that "except to the extent that the practice * * * is not set forth in statutes of the United States" the Rules should not apply to proceedings for "forfeiture of property for violation of a statute of the United States".

 Applying Rule 81(a)(2) it was held in a case of seizure on land that "except as to filing the libel and obtaining jurisdiction, admiralty procedure does not apply. A forfeiture proceeding, after these preliminaries takes the character of a law action" and is governed by the Federal Rules of Civil Procedure. Reynal v. United States, 153 F.2d 929, 931 (5th Cir. 1945); see also United States v. $3,976.62 in Currency, etc., 37 F.R.D. 564 (S.D.N.Y.1965); United States v. 216 Bottles, etc., 36 F.R.D. 695, 698-699 (E.D.N.Y.1965). The Advisory Committee Note to Rule 81(a)(2) in connection with the 1946 Amendments stated that Reynal was a "correct application" of the Civil Rules to forfeiture proceedings; this Note is quoted at 7 Moore's Federal Practice (2d ed.) 4413.

 When the civil and admiralty procedures were unified by the amendments effective July 1, 1966, reference to forfeiture proceedings was deleted from Rule 81(a)(2) and the Supplemental Rules were made applicable to such proceedings (Rule A; "statutory condemnation proceedings" was meant to include forfeiture proceedings, see 7 Moore's Federal Practice 4439, 1967 Cum.Supp. 147-148).

 Thus, forfeiture proceedings such as that at bar are now governed by the Supplemental Rules of the Federal Rules of Civil Procedure so far as applicable, otherwise by the Civil Rules generally.

 The "libel of information" filed herein on January 13, 1964 alleges that on September 26, 1963 authorized officers of the Internal Revenue Service seized the property in suit at the Ace Cigar and Stationery Store, 58 Centre Street, New Rochelle, New York (a location within the Southern District of New York). The libel further alleges that forfeiture under 26 U.S.C. § 7302 is proper in that the property was used or was intended for use by Rocco Cucino in the conduct of a business of accepting wagers ...


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