Case Summary: UNITED STATES v. ONE 1960 FORD, et al. (E.D. Tenn. May 31, 1962)

Factual and Procedural Background

The Court previously sustained a libel of information to enforce an in rem forfeiture of a 1960 Ford automobile belonging to Hooper Enloe (Dick) Denton, one of the intervenors, finding that the automobile had been intended to be, and was, used as an active aid to another's illegal and fraudulent purpose to defraud the government of whiskey taxes. See United States v. One 1960 Ford 4-Door Galaxie Sedan, D.C.Tenn. (1962), 202 F. Supp. 841. Pursuant to 40 U.S.C. § 304i the Court ordered disposition of the forfeited automobile.

Before issuance of the decree of forfeiture the Administrator of General Services applied to the Court for delivery of the property to the Regional Commissioner of Internal Revenue for official use. The Court ordered delivery to that official "for official use, and for any official use except by the Alcohol and Tobacco Tax Unit of said Department," thereby imposing a restriction on one particular official use. The libellant filed a petition seeking modification of the Court's order of disposition to remove that restriction. The present opinion addresses that petition.

Legal Issues Presented

Whether the Court had discretionary power to attach a restriction on official use when ordering disposition of forfeited property under 40 U.S.C. § 304i, as opposed to being compelled to follow unqualifiedly an application by the Administrator of General Services.
How the word "shall" in 40 U.S.C. § 304i should be construed—whether as mandatory ("must") or as indicating futurity/discretion in the context of court-ordered disposition of forfeited property.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Brown v. Southern Railway Company, C.A.6th (1911), 187 F. 481, 484	That the word "shall" denotes only futurity without connotation of obligation on the Court's part.	Used to support the view that "shall" in 40 U.S.C. § 304i does not necessarily impose a mandatory command on the court.
Cairo and Fulton Railroad Company v. Hecht (1877), 95 U.S. 168, 170, 24 L.Ed. 423	Supportive authority for the characterization of "shall" as indicating futurity rather than mandatory duty.	Referenced alongside Brown to show historical support for construing "shall" as not always mandatory.
Escoe v. Zerbst (1935), 295 U.S. 490, 55 S.Ct. 818, 79 L.Ed. 1566	That statutes should not be construed as directory when such a construction would seriously impair public or private interests intended to be protected by the statutes.	Invoked to show that "shall" need not be treated as directory where a mandatory reading would harm interests the statute protects.
Mason v. Fearson (1850), 50 U.S. 248, 9 How. 248, 13 L.Ed. 125	Where an act to be done by a public agency affects no third persons and is not clearly beneficial to them or to the public, "shall" does not mean "must" but indicates intent to confer discretionary power.	Applied to support that the Court may exercise discretion in ordering delivery of forfeited property under the statute.
Cory Corp. v. Sauber, C.A.7th (1959), 266 F.2d 58; rehearing denied 267 F.2d 802	When administrative interpretations and judicial constructions conflict, judicial constructions must prevail.	Used to justify the Court's independent statutory construction over any administrative expectation of mandatory action.
United States v. One 1951 Chevrolet Sedan, D.C.N.Y. (1955), 129 F. Supp. 799, 800	That the application of the Administrator of General Services to the court under the statute was in reality a request of the court.	Relied upon to characterize the Administrator's application as a request subject to the court's discretion.
Wilson Motor Company v. United States, C.A. 9th (1936), 84 F.2d 630, 633	That Congress intended provisions dealing with disposition of forfeited property to be exercised by the court.	Employed to support the conclusion that courts, not the Administrator alone, have authority to order disposition and attach conditions when appropriate.
United States v. One 1960 Ford 4-Door Galaxie Sedan, D.C.Tenn. (1962), 202 F. Supp. 841	Prior decision sustaining libel and finding evidence justified forfeiture because the automobile aided fraudulent tax evasion.	Serves as the factual and procedural predicate for the disposition order under review in the present petition.

Court's Reasoning and Analysis

The Court analyzed the petition by focusing on statutory construction of 40 U.S.C. § 304i and the role of the court versus administrative authorities in ordering disposition of forfeited property.

First, the Court interpreted the word "shall" in the statute as indicating futurity rather than an absolute mandatory command in every context, citing Brown v. Southern Railway Company and Cairo and Fulton Railroad Company v. Hecht for this principle.

Second, the Court observed that statutes should not be read as directory where such a reading would seriously impair public or private interests that the statutes intend to protect, citing Escoe v. Zerbst. The Court further noted that where an act concerns no third persons and is not clearly beneficial to them or the public, the word "shall" can indicate congressional intent to confer discretion upon the relevant decisionmaker, citing Mason v. Fearson.

Third, the Court emphasized that judicial construction of statutes controls over administrative interpretations when there is conflict, citing Cory Corp. v. Sauber. Using that principle, the Court concluded that Congress intended courts to have reasonable judicial discretion in ordering delivery of forfeited property on applications by the Administrator of General Services; otherwise Congress would have vested complete authority in the Administrator ex officio. The Court also relied on United States v. One 1951 Chevrolet Sedan to characterize the Administrator's application as a request to the court and on Wilson Motor Company v. United States to support the proposition that Congress intended disposition provisions to be exercised by the court.

Applying these principles to the facts and procedural posture here, the Court found that imposing the particular restriction on official use (excluding use by the Alcohol and Tobacco Tax Unit) was within the Court's discretion and that the libellant's challenge to that discretion lacked merit.

Holding and Implications

DENIED

Holding: The Court ordered that the libellant's petition to modify the order of disposition to delete the restriction on official use be, and hereby is, denied.

Implications: The Court's original order of disposition remains in effect, including the restriction that the forfeited automobile be for official use but not by the Alcohol and Tobacco Tax Unit of the Internal Revenue Department. The opinion does not announce any broader rule beyond affirming the Court's exercise of discretion in this case; it addresses the direct effect on the parties rather than establishing a novel precedent.

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UNITED STATES of America, Libellant, v. ONE 1960 FORD, etc., Respondent, Hooper Enloe Denton et al., Inter

NEESE, District Judge.

The Court heretofore sustained a libel of information to enforce an in rem forfeiture of an automobile belonging to Hooper Enloe (Dick) Denton, one of the intervenors herein, holding that the evidence adduced justified the forfeiture because the automobile was intended to be, and was, used as an active aid to another's illegal and fraudulent purpose to defraud the government of whiskey taxes. United States v. One 1960 Ford 4-Door Galaxie Sedan, D.C.Tenn. (1962), 202 F. Supp. 841. The Court subsequently ordered the disposition of the forfeited automobile. 40 U.S.C. § 304i. The libellant has now filed a petition seeking a modification of the order of disposition. The prayer in said petition is for the deletion from the disposal order of a restriction imposed by the Court on the official use of the forfeited automobile.

This restriction was imposed by the Court for good and sufficient reasons appearing on the trial of the libel action. In so doing the Court followed the pertinent statute which inter alia, directs the Administrator of General Services, before the entry of a decree of forfeiture, to "* * * apply to the court to order delivery of such property * * *" to certain governmental agencies, "* * * and if forfeiture thereof is decreed, the court shall, in the event that the property is not ordered by competent authority to be returned to any claimant, order delivery accordingly. All the property for which no such application is made shall be disposed of by the court in accordance with the law." 40 U.S.C. § 304i. Herein the said Administrator, before the entry of the decree of forfeiture, applied to this Court for an order to deliver the forfeited automobile to the Regional Commissioner of Internal Revenue, United States Treasury Department, for official use, and the Court ordered the Marshall to deliver same to such official "* * * for official use, and for any official use except by the Alcohol and Tobacco Tax Unit of said Department." The libellant insists that the Court lacked the discretionary power to attach the stipulated restriction to its order of disposition.

The word "shall", as it is used in 40 U.S.C. § 304i, denotes only futurity without any connotation of obligation on the Court's part. Cf. Brown v. Southern Railway Company, C.A.6th (1911), 187 F. 481, 484; see also Cairo and Fulton Railroad Company v. Hecht (1877), 95 U.S. 168, 170, 24 L.Ed. 423.

Statutes should not be construed as directory when that construction would result in serious impairment of public or private interests intended to be protected by such statutes, Escoe v. Zerbst (1935), 295 U.S. 490, 55 S.Ct. 818, 79 L.Ed. 1566, reversing C.A.10th, 74 F.2d 294, certiorari granted 294 U.S. 704, 55 S.Ct. 640, 79 L.Ed. 1240; but, where an act to be done by a public agency affects no third persons and is not clearly beneficial to them or to the public, the word "shall" does not mean "must" but, rather, indicates an intent in the Congress to confer a discretionary power. Mason v. Fearson (1850), 50 U.S. 248, 9 How. 248, 13 L.Ed. 125.

The construction and interpretation of a statute are judicial functions, and when administrative interpretations and judicial constructions conflict, the latter must prevail. Cory Corp. v. Sauber, C.A.7th (1959), 266 F.2d 58, rehearing denied 267 F.2d 802.

In construing 40 U.S.C. § 304i this Court is of the opinion that the Congress intended to invest the courts with reasonable judicial discretion in ordering the delivery of forfeited property to governmental agencies on application of the Administrator of General Services; otherwise the Congress could have invested complete authority in regard to such matters in the said Administrator ex officio. Any other interpretation would negate specific words of the statute. The application of the Administrator of General Services to the court under the statute was in reality a request of the court. United States v. One 1951 Chevrolet Sedan, D.C.N.Y. (1955), 129 F. Supp. 799, 800. The Congress intended the provisions of statutes dealing with the disposition of forfeited property to be exercised by the court. Wilson Motor Company v. United States, C.A. 9th (1936), 84 F.2d 630, 633.

Finding no merit in the libellant's petition for a modification of the Court's order of disposition filed herein, it is the ORDER of the Court that the same be, and it hereby is, denied.

UNITED STATES v. ONE 1960 FORD, (E.D.Tenn. 1962)