Origins of asset forfeiture
The Constitutional Convention
Given the fact that a number of colonies had abolished the use of forfeiture and corruption of blood, it is not surprising that the Constitutional Convention of 1787 took up the issue. What is unusual is that there was so little debate over including a prohibition of estate forfeiture within the Constitution itself. A number of the conventioneers were familiar with the work of Beccaria and had come to believe that a rational system of correction, which made punishment certain but humane, would dissuade all but a few [Rothman, 1971:59-61]. The harsh English criminal codes that included forfeiture were labeled as a mere tool for the passions of a few and cited as a source for perpetuating criminality rather than eradicating it. The Committee on Detail first proposed on August 6, 1787, disallowing corruption of blood and forfeiture except during the individual's lifetime as penalty for committing treason [Farrand, 1966, Vol. 2:182].
George Mason, later architect of the Bill of Rights, raised the issue of forfeiture on September 15. Mason was concerned that wives be exempt from their husbands' guilt and not be impoverished by the application of forfeiture or corruption of blood [Farrand, 1966, Vol. 2:637]. Mason's home state of Virginia had long made provision to save a wife's dower from forfeiture. Mason's comments do not appear to have changed the wording of the proposal. Article 3, Section 3, Clause 2 of the Constitution as finally drafted read: "The Congress shall have power to declare the punishment of treason; but no attainder of treason shall work corruption of blood, nor forfeiture, except during the life of the person attained" [U.S. Constitutional Convention, 1819:364]. The Constitution (Article 1, Section 9, Clause 3) also forbade bills of attainder for felonies, which had been used following capital convictions by legislative action to demand estate forfeitures [Maxeiner, 1977:779]. The Federalist Papers also praised the elimination of bills of attainder [Hamilton, 1971:512].
In 1790, the very first Congress [18 U.S.C., Section 3563 (1982)] took an additional step in eliminating in personam forfeitures for all federal convictions and judgments by abolishing forfeiture of estate and corruption of blood for felony [Hughes and O'Connell, 1984:619; Maxeiner, 1977:779]. Many states immediately copied the federal laws in their constitutions. Kent [1971, Vol. 4:318], writing in 1826, listed Pennsylvania, Delaware, and Kentucky as states that prohibited forfeiture of estate except during the life of the offender. Ohio, Indiana, Tennessee, Illinois, and Missouri prohibited criminal forfeitures entirely. Joseph Story [1970, Vol. 3:750-751], an early nineteenth century Supreme Court Justice, argued that the colonists' experience with the English system of forfeiture also led to the Eighth Amendment's prohibition of excessive fines. The terms fine and forfeiture were often used synonymously in common law.
The Navigation Acts and In Rem Forfeitures
While criminal or in personam forfeitures were virtually abolished in America during the late eighteenth century, seizure of property or assets remained possible through the civil courts. Such procedures are today referred to as in rem forfeitures. Their true origin is not in English felony or treason law, but in the Admiralty laws passed in order to enforce the Navigation Acts. It is to these acts and their penalties that we will now turn.
The ultimate purpose of the Navigation Acts was to insure that England and its mercantile empire would always have a favorable balance of trade and, specifically, to win trade dominance over the Dutch. The first navigation law was passed during the reign of Richard II (1377-1399) to prohibit foreign ships from carrying goods from one English port to another [Dickerson, 1978:7]. This law was later modified to allow some foreign ships access to British cargoes, depending on the nonavailability of English ships [Harper, 1964:19]. In most cases of violations prior to the seventeenth century, only goods on which duty had not been paid were subject to forfeiture [Maxeiner, 1977:774].
The Navigation Act of 1651 was to become the most important in that it provided the basic formula followed for two centuries and led to the abandonment of earlier practices. After 1651, all merchandise had to be brought to England directly from the country of production either in English ships or in ships from the producer nation [Harper, 1964:34-38]. In addition, no goods from British colonies in Asia, Africa, or America could be imported to England in foreign ships. Exports from England were not an issue in this act.
Until the Revolution, the American colonists were considered to be residents of England under the Navigation Acts. However, after 1660 it was illegal to import goods to or export them from the colonies unless British ships with three-fourths English crews were used [Dickerson, 1978:7]. The same act also prohibited staple colonial products (e.g., sugar, tobacco, rice, cotton) from being shipped to anywhere but England [Harper, 1964:57]. Later, sending goods by water transport from one American colony to another was prohibited [Dickerson, 1978:19].
In order to insure that the Navigation Acts were followed, the English used forfeiture penalties and set up an elaborate customs system to enforce them. A captain was to report directly to the customs house upon docking his ship in England. At the customs house, he had to produce a complete detailed inventory of his cargo. Customs officers ("landwaiters") were to search, unpack, and weigh all goods looking for unreported or contraband items. All unaccounted for or contraband goods were subject to seizure and were to be taken immediately from the ship to the King's storehouse [Harper, 1964:89-90]. Customs agents were considered by the Crown to be informants and were offered rewards of up to one-half of the forfeitable assets as moiety [Harper, 1964: 51].
Forfeiture proceedings were held either in vice-admiralty courts or in the Court of the Exchequer [Harper, 1964:109]. The latter was a common law court that used juries, the former a civil law court administered by a judge [Ubbelohde, 1960:6, 19]. Admiralty courts were first established between 1340 and 1360 as a means of dealing with piracy. The first vice-admiral courts were established in 1536 and were responsible for handling all felonies committed at sea, disputes that involved fishermen or sea merchants, and international disputes about shipping, as well as collecting all monies owed to the Crown [Crump, 1931:4-14]. The differences between common law and admiralty courts were substantial. For example, felonies tried under admiralty law could not result in corruption of blood [Hale, 1971, Vol. 1:355]. Customs regulation was added to the vice-admiralty's duties in the late seventeenth century [Ubbelohde, 1960:12]. Proceedings against customs violators could be directed either against the smuggler (in personam) and/or against the offending ship (in personam as a result of a smuggler's conviction or in rem because the ship had been used as a conveyance of contraband or unreported goods), or against the offending cargo (in rem) [Harper, 1964:111]. Contraband cargo was automatically guilty. The ship's master did have the opportunity to dispute unreported or wrongly reported goods, but not contraband. However, the captain was put in the unenviable position of having to disprove the allegations made by customs officials concerning the property.
While the use of in rem proceedings appears to be most similar to deodand in that the offending items are inherently guilty and thus subject to automatic forfeiture [Gilmore and Black, 1975:590], in rem has another origin [Maxeiner, 1977:771]. Since ancient times the King had used an in rem claim to give him title to "treasure-trove, wrecks, waifs, and strays," since there were no obvious owners against whom suit could be brought [Harper, 1964:111]. While it is not exactly clear when the Exchequer began to assert in rem jurisdiction over forfeitures, in regard to smuggling it often proved easier to catch the cargo than the smuggler, who frequently ran to escape judgment [Maxeiner, 1977:775]. The cargo left ownerless could then be forfeited in rem. Under the Navigation Acts, a convenient fiction was created, making all seizable imports virtually ownerless, legally.
In reality, a number of captains were able to have their seizures released if they could prove they were a "fair trader" who had made an honest mistake [Harper, 1964:103]. Some discretion was allowed; otherwise, most owners constantly would have been loosing their ships. Vicarious liability, however, also attached; it was legally possible for an owner to lose an entire ship because of actions, undertaken without the captain's knowledge, of a seaman [Reed and Gill, 1987:65]. As forfeiture was often the lesser punishment, it was common for the owner not to contest it for fear of further proceedings in personam. When suing in rem, the customs "informer" had the authority to proceed alone without Crown interference and negotiate a monetary settlement with the claimant-owner in order to avoid the expense of a trial [Maxeiner, 1977:774-776].
Once goods were seized and a proclamation issued, interested parties had eight days to claim them and disprove the Crown's right to the goods. After the eight days, remaining confiscated goods were sold at auction to the highest bidder. After money paid to informants and court costs were deducted, proceeds went directly into the Exchequer [Harper, 1964:51, 111].
Beginning with George Bancroft, a number of historians have argued that the Navigation Acts and their consequent forfeitures were a chief cause of the American Revolution. Dickerson , based on an extensive analysis of colonial documents, found that such was not the case. Prior to 1760, the colonies, for the most part, benefited from the Navigation Acts. Only when new revenue laws, such as the Sugar Act of 1764 and the Revenue Act of 1767, led to questionable seizures of colonial cargoes, did Americans complain bitterly [Dickerson, 1978:211-212].
Prior to 1763, there were eleven provincial vice-admiralty courts in the colonies. Judges were appointed by the colonial governors to supervise the Crown's interest in all maritime matters. Judges were not paid a salary but a percentage on the goods they condemned and by fixed fees allowed by colonial statutes [Ubbelohde, 1960:6]. Despite the temptation to abuse the office for personal benefit, few of the judges ever got rich. After the forfeiture and sale of goods at auction, monies were first used to pay court costs and five percent commission to court officers. The remaining amount was split three ways: one-third to the customs informant, one-third for the King, and one-third for the governor [Ubbelohde, 1960:16].
After 1763, civil forfeiture trials were now to be held exclusively in vice-admiralty courts; the colonies had no exchequer courts. However, the colonists had traditionally handled statutory forfeitures in common law courts and treated them more like in personam actions rather than in rem [Maxeiner, 1977:777-778]. This was especially true in the seventeenth century, when virtually all colonial maritime matters were handled in common law courts [Crump, 1931:38-63]. When the Crown failed to show fraud, the colonial courts often denied a forfeiture, even when there was proof of technical violations. The Crown preferred to sue in the vice-admiralty courts once they had been established, since it could thereby avoid colonial juries. In addition, only civil courts could impose in rem penalties [Ubbelohde, 1960:20]. The transfer was bitterly criticized by John Adams and other Americans because it denied trial by jury and shifted the burden of proof to defendants. Ironically, at the same time in England, a growing percentage of defendants were permitted to transfer their cases from vice-admiralty to exchequer courts with their additional protections [[Ubbelohde, 1960:19].
Following the French and Indian War, the English established the first of four new American vice-admiralty judgeships whose goal was to overhaul the customs tax base from the colonies to pay off the war debt [Ubbelohde, 1960:4, 131]. The new revenue acts included new bonding provisions that had to be met separately for iron, wood, enumerated, and non-enumerated goods. Failure to acquire the proper bondings could result in seizure and forfeiture of ship, tackle, stores, and cargo. In addition, ships could be stopped at sea and any items not found on the ship's cargo list ("docket") were subject to seizure.
The burden of in rem proof was on the ship's owner, not on customs officials, who received one-third value of all dock seizures and one-half value if interception was made at sea. A 1763 English statute authorized all British naval vessels to act as customs officers on the high seas off the American coast. Forty-four ships were placed up and down the colonial coastline to stop and search any arriving or departing ships. The result of turning law enforcement over to the military who had little knowledge of civil law resulted in its frequent violation by the Navy's own actions [Ubbelohde, 1960:195]. Even if seizures were made unjustly and returned by the judge to their owners, the plaintiff paid all court costs and was not permitted to file a damage suit against the customs officer [Dickerson, 1978:212]. Thus, no matter how unfair a seizure might be, the American claimant suffered serious financial loss. Every time a shipowner challenged a seizure the admiralty court made additional revenue. A commonly used ploy to gain seizures was to overlook a detail of the law for a period of time and then, when ship captains had grown complacent, suddenly begin to enforce it [Dickerson, 1978:219]. While most of the seizures had stopped by 1770, the experience soured the colonists on the admiralty courts [Dickerson, 1978:254]. Given that England had no governmental machinery that could control all of the colonies other than through ocean-borne commerce, abuse of the Navigation Acts in the 1760's caused many Americans to lose faith in British administration.
While the colonists made a conscious decision to eliminate criminal forfeitures both before and after the Revolutionary War, they did not do away with in rem civil forfeitures, particularly as a way to stop the importation of contraband goods [Kurisky, 1988:251]. During the Revolutionary War, colonial governments recognized that they needed to continue the use of vice-admiralty type courts in order to bring to trial captured British ships. They did make a serious attempt to avoid the mistakes of the old vice-admiralty courts and insisted on the use of juries in all cases. After only a short period of time, however, it became evident that ordinary citizens did not understand the complexities of maritime law; and by 1780 most colonies had eliminated vice-admiralty juries [Ubbelohde, 1960:195-199]. Under the Articles of Confederation admiralty law was placed in the hands of the states, except for decisions concerning captured ships [Gilmore and Black, 1975:11].
The U. S. Constitution (Article 3, Section 2) established admiralty courts as federal courts largely based on civil law [Gilmore and Black, 1975:18]. The First Congress continued the practice of juryless trials for maritime violations by statutorily subjecting to in rem forfeiture vessels and cargoes that disobeyed customs laws [Reed and Gill, 1987:66]. Contraband, as well as goods imported in violation of the Embargo Acts or by piracy, continued to be automatically guilty and subject to seizure [Weiner, 1981:232]. Once the African slave trade was outlawed foreign ships that carried slaves into American waters were also subject to automatic forfeiture. In some cases the slaves were sold as property; in other cases slaves were set free and allowed to return to Africa [Noonan, 1977]. Slaves could be seized in rem as cargo, but might later be transformed into persons and freed [Jones, 1987:73]. In 1827, in the Palmyra case, Justice Story first legally defined in rem forfeitures:
It is well known, that at the common law, in many cases of felonies, the party forfeited his goods and chattels to the crown. The forfeiture did not, strictly speaking, attach in rem; but it was a part, or at least a consequence, of the judgment of conviction.... The crown's right to the goods and chattels attached only by the conviction of the offender.... But this doctrine never was applied to seizures and forfeitures, created by the statute, in rem, cognizable on the revenue side of the Exchequer. The thing is here considered as the offender, or rather, the offense is attached primarily to the thing; and this, whether the offense be malum prohibitum or malum in se.... The practice has been... that the proceeding in rem stands independent of, and wholly unaffected by any criminal proceeding in personam [quoted in Reed and Gill, 1987:62].
In 1844, the Supreme Court, under Justice Story, upheld forfeiture of the ship's cargo in U. S. v. Brig Malek Adhel despite the fully established innocence of the shipowner [Gilmore and Black, 1975:592]. Customs duties provided no less than 70% to 80% of federal revenues during this period, creating an underlying rationale for the court decisions to uphold in rem seizures [Reed and Gill, 1987:66]. The Supreme Court continues to this day to uphold the civil nature of admiralty law, for example, allowing seamen and dock workers to file in rem suits against unseaworthy vessels that have injured them [Baer, 1979:34-36].
Our traffic courts are basically admiralty courts.