The Court understands that this indictment has not yet been
reached for trial.
Jupiter Wine Corp. filed a verified answer and counterclaim
on May 1, 1991. In the verified answer and counterclaim,
Jupiter Wine Corp. alleged that it was the tenant of the
leasehold of the premises of Patterson Wine and Spirits, denied
essentially all of the material allegations of the complaint,
and pleaded various affirmative defenses including failure to
state a claim, and lack of subject matter jurisdiction. The
answer specifically raises the issue of whether 21 U.S.C.
Section 881(a)(7) extends to the forfeiture of a leasehold
only, separate from a seizure or forfeiture of the real
property. The answer also pleaded misjoinder and that the
evidence in support of the forfeiture was obtained illegally.
The answer also pleaded counterclaims, (1) to recover
$70,000.00 in currency seized from William Henry, President of
Jupiter Wine Corp. without consent, lawful cause or
justification and in violation of Henry's civil rights, and (2)
to recover the Chevrolet Blazer truck seized from William
The motions were fully submitted for decision on August 1,
1991 upon docketing a copy of the lease.
Claimant attacks the arrest of William Henry as improper,
made without probable cause and attacks the in-rem forfeiture
of the lease because the identity of William Henry and the fact
that illegal drugs were being stored at and delivered from the
liquor store premises represents information learned by virtue
of an eavesdropping warrant issued to a joint task force by a
Justice of the Supreme Court of the State of New York pursuant
to Article 700 of the New York Criminal Procedure Law.
Essentially the argument is that this joint task force could
have obtained a Title III warrant from a Federal Court, but for
tactical or other reasons sought not to do so. Having once
obtained a State wire tap order, it is argued, the agents could
not use the information discovered through the State wire tap
order except in the manner consistent with State law. The
argument then continues to its next premise, that the
forfeiture was the product of an illegal use of information
lawfully obtained under a State Court wire tap order and
This Court concludes there is no prohibition against use by
the Federal Government in a Federal forfeiture proceeding, of
information derived from a State eavesdropping warrant.
The Court reads the New York Statute as permitting such
collateral use in a Federal forfeiture proceeding. In any
event, the Court believes that the use of the electronic
surveillance authorized pursuant to New York State Court orders
in a Federal Court, is of necessity regulated by the Federal
Statute authorizing disclosure of wire tap evidence, 18 U.S.C.
Section 2517, which reads in relevant part as follows:
(1) Any investigative or law enforcement officer
who . . . has obtained knowledge of the contents
of any wire oral or electronic communication, or
evidence derived therefrom, may disclose such
contents to another investigative or law
enforcement officer to the extent that such
disclosure is appropriate to the proper
performance of the official duties of the officer
making or receiving the disclosure.
(2) Any investigative or law enforcement officer
who . . . has obtained knowledge of the contents
of wire, oral or electronic communication or
evidence derived therefrom, may use such contents
to the extent such use is appropriate to the
proper performance of his official duties.
(5) When an investigative or law enforcement
officer, while engaged in intercepting wire, oral
or electronic communications . . . intercepts . .
. communications relating to offenses other than
those specified in the order of authorization or
approval, the contents thereof, and evidenced
derived therefrom, may be disclosed or used as
provided in Sub-Sections (1)(2) of this Section.
This Federal Statute is a part of the paramount law of the
nation and is adequate
to cover the use of the electronic surveillance in the manner
said to have taken place in this case. United States v. Feola,
651 F. Supp. 1068, 1100 (S.D.N.Y. 1987).
We then consider the question of whether
21 U.S.C. § 881(a)(7) permits the forfeiture of the tenant's rights and
leasehold under a lease of real property.
Defendant-in-rem claims such a forfeiture is permissible only
where the underlying fee interest is also sought to be
forfeited. This argument has no basis in law and is directly
contradictory to the express words of the Statute itself which
extend to "all real property, including any right, title and
interest (including any leasehold interest) in the whole of any
lot or tract of land" used in the narcotics trade. A leasehold
interest is expressly defined in the Statute as a type or class
of real property interest subject to forfeiture.
While the basis for this statutory provision is conceded to
have been Congressional concern for drug dealing in public
housing projects, it seems clear as a matter of statutory
construction that a leasehold interest is separately subject to
forfeiture under Section 881(a)(7) as "real property" even
where the government cannot also proceed against the underlying
fee title (because the Landlord is not involved in or aware of
the unlawful use).
This Court concludes that upon proof at trial that the
premises were with the knowledge of the tenant Jupiter Wine
Corp., through its President, Mr. Henry, used for the
warehousing of marijuana intended for illegal distribution and
sale, the leasehold could be forfeited.
There is however, another problem as to the forfeiture of
this particular leasehold in the context of this case. The
lease itself (copy docketed August 1, 1991 as part of document
number 16), provides that the Landlord leased to the tenant the
building known as "The Corner", to be used and occupied as a
liquor store for a term to commence on May 1, 1986 and to end
on October 31, 1991, upon payment of the rent reserved in the
The lease also contained the following clauses:
THIRD — That the Tenant will not without the
written consent of the Landlord first obtained in
each case, either sell, assign, mortgage or
transfer this lease, underlet the demised premises
or any part thereof, permit the same or any part
thereof to be occupied by anybody other than the
Tenant and the Tenants employees, . . . use the
demised premises or any part thereof for any
purpose other than the one first above stipulated.
FIFTH — If the whole or any part of the premises
hereby demised shall be taken or condemned by any
competent authority for any public use or purpose
then the term hereby granted shall cease from the
time when possession of the parts so taken shall be
required for such public purpose . . .
SIXTH — If . . . this lease or the estate of the
tenant hereunder be transferred or pass to or
devolve upon any other person or corporation . . .
this lease shall thereby at the option of Landlord
be terminated and in that case neither the tenant
nor anybody claiming under the tenant shall be
entitled to go into possession of the demised
This case cannot be tried prior to Halloween, when the lease
expires. This is so partly because of docket congestion due to
unfilled judicial vacancies, and partly because the
corporation's president, Henry cannot be expected to testify in
a civil forfeiture proceeding while the criminal proceedings
against him remain pending. Should he do so, he would subject
himself to cross examination in this case, and any statements
elicited under oath in this action could be read to the trial
jury in Bronx County as an admission under oath on his part. To
protect his privilege against self incrimination, a reasonable
continuance would have to be granted to resolve the related
criminal proceeding in the state court. Cf. U.S. v. Leasehold
Interests in 118 Avenue D Apartment,
Even if this case could be tried on the merits, and a final
judgment entered prior to the expiration of the lease, the
vesting of the lease in the United States Government would
automatically trigger its destruction, because this would be a
clear violation of the "no assignment" clause. Furthermore, it
is highly unlikely that the United States Government would
intend to operate a liquor store on the premises, the only
permitted use under the lease, and any assignee of the
Government would have to obtain a liquor license for that
community, a bureaucratic challenge requiring lots of time and
money. There is also no reason to believe that the unexpired
term of the lease has any financial value in excess of the rent
required to paid.
For all these reasons and because there is no practical
relief or benefit which the Government can obtain from
forfeiture of this leasehold, this case is essentially an
illusionary lawsuit. It is not a true case or controversy
within our constitutional jurisdictional requirements for a
case or controversy. Essentially, a law suit is not a case or
controversy when no effective judicial relief of value can be
obtained by the Plaintiff if it prevails. Ex parte Baez,
177 U.S. 378, 390, 20 S.Ct. 673, 677, 44 L.Ed. 813 (1900) (federal
court lacks jurisdiction where there is no subject matter on
which the judgment of the courts order can operate).
The counterclaims are no better. These are surely not
compulsory counterclaims under Rule 13 F.R.Civ.P. The pleadings
show that the Blazer truck and the $70,000.00 in currency are
claimed to be the property of Mr. William Henry. The fact that
he happens to be the president of Jupiter Wine Corp. whose
leasehold is sought to be forfeited, does not give rise to a
compulsory counterclaim and absent an assignment, Jupiter Wine
Corp. is not in a position to enforce the property rights of
its president Mr. Henry.
Even if the need for an assignment were satisfied, and Mr.
Henry were himself the claimant-in-rem and counterclaiming
defendant, the Court would nevertheless face an insuperable
jurisdictional problem with respect to the counterclaims.
The $70,000.00 and the Chevrolet truck are property seized
and subject to administrative forfeiture. The only judicial
remedy available to Mr. Henry, is to file a claim and cost bond
to convert the administrative proceedings into judicial
forfeiture proceedings. The entire matter of reclaiming this
seized property is subject to the jurisdiction requirements of
21 U.S.Code Section 881(a), (b). Section 881(d) incorporates by
reference the customs forfeiture procedures found in 19 U.S.C.
Section 1602 et seq. This provides for administrative
forfeiture and contains elaborate and exclusive provisions by
which the claimant may recover the property. The court
concludes that these administrative forfeiture proceedings
satisfy Fifth Amendment requirements of due process, and
represent the only means of recovering the $70,000 cash and the
It is true that this is a more burdensome procedure, but it
is facially constitutional. That these procedures may have been
adopted by the legislative power to make things harder for drug
dealers, or suspected drug dealers, as argued at the hearing is
beside the point. There might be a case where an individual
sued by the United States to recover money could at least set
off prior forfeitures arising out of the same transaction. In
any event, this is not such a case and these counterclaims must
be dismissed for want of subject matter jurisdiction.
The Court is uncertain at this time as to whether it may
properly make the finding contemplated by Rule 54(b) F.R.Civ.P.
and enter a final judgment at this time as to the interests of
Mr. William Henry and Jupiter Wine Corp. The action seems to be
open as to one other unrelated party. Counsel may consider
together and agree on the issue of whether an immediate
judgment should be entered to permit an appeal while the lease
still exists, or whether disposition of this matter should
await the conclusion of the balance of the lawsuit, which
to involve essentially unrelated matters.
© 1992-2003 VersusLaw Inc.