United States v. Parcel of Rumson, NJ, Land

Background

The Government sued to seize a Rumson, New Jersey house it said had been bought in 1982 with money traceable to illegal drug sales. A man named Joseph Brenna gave the homeowner about $240,000 to buy the house. She lived there with her children and says she did not know the money came from drugs. The District Court denied her summary judgment, limiting the innocent-owner defense to bona fide purchasers and to people who owned property before the illegal acts. The Third Circuit disagreed and allowed her to try to prove she was an innocent owner.

Reasoning

The Court focused on the plain text of the federal forfeiture law. It held that the statute’s innocent-owner protection uses the unqualified word “owner,” and the court would not read in a special limit that Congress did not include. The Court also rejected the Government’s view that the United States automatically owns proceeds the moment a drug sale happens. Under longstanding law, title does not become the Government’s until a judicial forfeiture is obtained; an owner may therefore assert the innocent-owner defense before relation-back takes effect. The Court left open some questions about exactly when knowledge must be shown and how tracing of proceeds should work.

Real world impact

The decision means people who received money or bought homes with suspect funds can try to show they lacked knowledge and keep their property unless a court rules otherwise. It prevents immediate, automatic transfer of ownership to the Government without a forfeiture judgment. Because the Court resolved statutory interpretation rather than the facts, the homeowner still must persuade a factfinder that she truly lacked knowledge.

Dissents or concurrances

Justice Scalia agreed with the result but not all reasoning; Justice Kennedy (joined by the Chief Justice and Justice White) dissented, arguing a donee should not beat the Government’s superior claim when the donor’s title was forfeitable.