ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEES
Donald E. James Gregory F. Zoeller
Fort Wayne, Indiana Attorney General of Indiana
Kathy Bradley
Deputy Attorney General
Indianapolis, Indiana
In the FILED
Apr 27 2011, 10:37 am
Indiana Supreme Court CLERK
_________________________________ of the supreme court,
court of appeals and
tax court
No. 02S03-1104-CV-241
MARTIN SERRANO,
Appellant (Defendant below),
v.
STATE OF INDIANA, AND THE
CITY OF FORT WAYNE,
Appellees (Plaintiffs below).
_________________________________
Appeal from the Allen Superior Court, No. 02D01-0808-PL-422
The Honorable David J. Avery, Judge
_________________________________
On Petition to Transfer from the Indiana Court of Appeals, No. 02A03-0908-CV-362
_________________________________
April 27, 2011
Shepard, Chief Justice.
Civil forfeiture is a device, a legal fiction, authorizing legal action against inanimate
objects for participation in alleged criminal activity, regardless of whether the property owner is
proven guilty of a crime—or even charged with a crime. Appellant Martin Serrano lost his truck
in a forfeiture action based on the presence of cocaine residue found in the carpet of the vehicle
and on a box of $500 in quarters. The Court of Appeals was correct to reverse the forfeiture
because the State failed to prove any substantial connection, any nexus, that the truck bore to
commission of a crime.
Facts and Procedural History
Martin Serrano was the purchasing manager at the El Paraiso grocery store in Fort
Wayne. The Fort Wayne Police Department had placed the store under surveillance after
receiving an anonymous tip that the store was receiving shipments of drugs from Chicago.
(Appellant‘s App. at 100, 102, 133, 136–37.) On July 10, 2008, officers observed Serrano‘s
2004 GMC silver pickup ―meeting‖ with a box truck in front of the grocery store. (Tr. at 77.)
Officers observed both vehicles depart in opposite directions and meet again behind the store,
with the box truck eventually backing up to the loading dock. They did not witness anything
being loaded or unloaded from either vehicle.
The police followed the box truck as it left the grocery store and conducted a traffic stop.
During this stop, the pickup truck driven by Serrano ―went by and started speeding off,‖
eventually ―weaving in-and-out of traffic.‖ (Tr. at 79–80.) Officers had run the license plate on
Serrano‘s pickup and determined that the registered owner had an outstanding warrant. (Tr. at
79.) Uniformed officers eventually caught up to Serrano and pulled him over for speeding.
After the officers took Serrano into custody on the outstanding warrant, a canine officer
conducted a sniff test of Serrano‘s truck. (Tr. at 18–19, 80, 122.) The canine alerted, indicating
the presence of narcotics. (Tr. at 44–45, 52.) The police towed Serrano‘s vehicle to a department
facility. Meanwhile, Serrano was released after it was confirmed, via fingerprints, that the
warrant was for a different Martin Serrano. (Tr. at 7–8.)
The next day, officers obtained a search warrant and searched Serrano‘s truck, which was
still in police possession. They found a box of about $500 in quarters and $51 in cash. (Tr. at 80,
82, 98–99.) The box of quarters was covered in a residue later determined to be cocaine. (Tr. at
83.) There was similar residue in the front carpet and the back carpet of the truck. (Tr. at 83–85.)
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When questioned concerning the drug residue about a month later Serrano admitted that he
sometimes ―makes‖ drugs, which he later clarified to mean that he uses drugs. He also said he
was the only person who drives the truck (Tr. at 87–90.)
On August 20, 2008, the State filed a complaint for forfeiture, citing the cocaine residue.
(Appellant‘s App. at 305–06.) The complaint sought forfeiture of Serrano‘s truck and the $551
recovered from the vehicle. On two occasions during September, investigators conducted ―trash
runs‖ at Serrano‘s residence recovering various banking receipts (wire transfers, deposit receipts
and money orders). (Tr. at 91; Plaintiff‘s Ex. 8, 11, 12, 13, 14.)
After a bench trial, the trial court entered judgment in favor of the State for the truck and
in favor of Serrano for the cash. (Appellant‘s App. at 13.) The court concluded that Serrano used
his truck to transport or facilitate the transportation of a controlled substance for the purposes of
committing a drug related offense, specifically, possession of cocaine or a narcotic drug in
violation of Indiana Code § 35-48-4-6 (2008). (Appellant‘s App. at 12.)
Serrano‘s appeal has challenged the sufficiency of the evidence, contending the State
failed to prove that the presence of cocaine in his truck was anything more than incidental or
fortuitous. A divided Court of Appeals agreed, and reversed, concluding the State failed to
demonstrate a nexus between Serrano‘s possession of cocaine residue and the use of his truck.
Serrano v. State, No. 02A3-0908-CV-362, (Ind. Ct. App. Jun 28, 2010). We grant transfer to
confirm the rationale of the Court of Appeals in reversing the trial court.
In Rem Forfeiture
In rem forfeiture is an ancient concept under which courts obtained jurisdiction over
property when it was virtually impossible to seek justice against property owners guilty of
violating maritime law because they were overseas. Civil forfeiture traces to ancient Roman and
medieval English law; both made objects used to violate the law subject to forfeiture to the
sovereign. See United States v. 785 St. Nicholas Ave., 983 F.2d 396, 401–02 (2d Cir. 1993).
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Civil forfeiture is no longer tethered to difficulties in obtaining personal jurisdiction over an
individual. It now serves as ―one of the most potent weapons in the judicial armamentarium,‖
See United States v. 384–390 West Broadway, 964 F.2d 1244, 1248 (1st Cir. 1992) (discussing
widespread use of in rem proceedings against drug offenders). Civil forfeiture is a leading
method for imposing economic sanctions against narcotics traffickers.
Today, all states have statutory provisions for some form of asset forfeiture, and there are
more than four hundred federal forfeiture statutes relating to various federal crimes. Marian R.
Williams, Jefferson E. Holcomb, Tomislav V. Kovandzic & Scott Bullock, Institute for Justice,
Policing for Profit: The Abuse of Civil Asset Forfeiture 11 (2010). An important feature of
many of these statutes is characterization of the process as civil forfeiture under which (by
contrast to criminal forfeiture) a property owner need not be found guilty of a crime—or even
charged—to lose permanently their cash, car, home or other property. The relative ease of
effecting such forfeiture and the disposition of the assets have become a matter of public note.1
Indiana’s Forfeiture Arrangements
Indiana‘s system for civil forfeitures proceeds under at least two constitutional provisions
and a set of implementing statutes.
The leading constitutional provision governing forfeiture is a product of the
Constitutional Convention of 1850–51. Aside from dealing with the State‘s catastrophic debt
problems arising from the Internal Improvements program and placing limits on the scourge of
local and special legislation, the convention‘s leading achievement was an education article that
mandated a ―general and uniform system of Common Schools, wherein tuition shall be without
charge, and equally open to all.‖ Ind. Const. art. 8, § 1. At the core of the financing scheme for
this objective was creation of the Common School Fund, a ―perpetual‖ depository for ―support of
1
Heather Gillers, Mark Alesia & Tim Evans, Cashing in on Crime, Indianapolis Star, Nov. 14, 2010, at
A1.
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Common Schools, and no other purpose.‖ Ind. Const. art. 8, § 3.2 Among the multiple financial
sources committed to this fund are ―the fines assessed for breaches of the penal laws of the State;
and from all forfeitures which may accrue.‖ Ind. Const. art. 8, § 2. In addition to these
requirements, of course, the transfer of property from private hands to the government is subject
to due course of law provisions. Ind. Const. art. 1, §§ 12, 21.
The legislation that implements these constitutional directives is labeled Forfeiture of
Property Used in Violation of Certain Criminal Statutes. It provides three grounds for the
seizure of property. The State may seize property: (1) if the seizure is incident to lawful arrest,
search or administrative inspection, or (2) if it is the ―subject of a prior judgment in favor of the
state or unit in a proceeding under‖ the forfeiture statute, or (3) if a court issues an order for
seizure after an ex parte determination of probable cause that the property is subject to seizure
under the forfeiture statute. See Ind. Code. § 34-24-1-2 (2008). The Code directs that when a
court enters judgment for the State it shall order the proceeds ―transferred to the treasurer of state
for deposit in the common school fund.‖ Ind. Code § 34-24-1-4 (d)(2)(D) (2008).3
The case before us rests on the first grounds for forfeiture. Law enforcement initially
impounded Martin Serrano‘s vehicle while the police transported Serrano for fingerprinting to
resolve questions surrounding an outstanding warrant in his name. After releasing Serrano, the
officers continued to hold his vehicle while they sought a search warrant, which was granted and
executed the next day.
Indiana‘s forfeiture statute announces a standard on which the State‘s petition for
forfeiture may be granted. It states in relevant part:
2
See Donald F. Carmony, The Indiana Constitutional Convention of 1850-1851, 157–60, (Bethany L.
Natali & Elizabeth R. Osborn, eds. 2009), (Master‘s Thesis, Indiana University 1931) for a description of
the extensive deliberations on design of the Common School Fund.
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From the proceeds, the court may except law enforcement expenses incurred ―for the criminal
investigation associated with the seizure‖ and a prosecutor‘s expenses associated with the forfeiture
proceeding and the expenses related to the criminal prosecution. Ind. Code § 34-6-2-73 (2008). Whether
this limited diversion, calculating actual expenses on a case-by-case basis, is consonant with the
constitutional command that ―all forfeitures‖ be deposited in the Common School Fund is an unresolved
question.
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(a) The following may be seized:
(1) All vehicles . . . if they are used or intended for use
by the person . . . to transport, or in any manner to facilitate
the transportation of the following:
(A) A controlled substance for the purpose of committing,
attempting to commit, or conspiring to commit any of the
following:
(vii) Possession of cocaine or a narcotic drug . . . .
Ind. Code § 34-24-1-1 (a)(1)(A)(vii) (emphasis added). To obtain the right to dispose of
property, use the property, or recover law enforcement costs the State must demonstrate by a
preponderance of the evidence that the property was subject to seizure. Ind. Code § 34-24-1-
4(a).
In Katner v. State, 655 N.E.2d 345 (Ind. 1995), this Court held that to sustain a forfeiture
the State must demonstrate that the property sought in forfeiture was used to commit one of the
enumerated offenses under the statute. This nexus, we said, best articulates the statute‘s
requirement of proof by a preponderance that the property is subject to forfeiture. Id. at 349.
Requiring such proof, Justice Selby wrote, is a ―means to guarantee that the government is
seizing actual instrumentalities of illegal drug trade. . . . Depriving persons of their property such
as vehicles unrelated to the drug trade will do little to advance our Legislature‘s intent.‖ Id. at
349. Drawing a comparison to the Seventh Circuit‘s application of federal statutes, we held that
our statute ―requires more than an incidental or fortuitous connection between the property and
the underlying offense.‖ Id. at 348–49 (comparing our statute to the federal act discussed in
United States v. 916 Douglas Avenue, 903 F.2d 490 (7th Cir. 1990)).4
Katner had been arrested following a traffic stop and violent altercation with police.
Upon this arrest, officers discovered that Katner had a container in his pocket that contained
cocaine residue. The State filed for forfeiture of his vehicle based on Katner‘s possession of less
than .06 of one gram of cocaine. We adopted the Court of Appeals‘ decision in Katner. ―While
4
Accord, Putnam Co. Sheriffs Dept. v. Smelley, No. 67C01-0902-MI-41 (Putnam Circuit Court, Bolk, J.,
Feb. 17, 2010) (alert by canine, plus cash found in van, held insufficient to sustain forfeiture).
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the presence of the cocaine residue in the glass tube was sufficient to support Katner‘s
possession conviction, his possession of the substance in his automobile did not constitute
‗transportation‘ of cocaine for the purpose of possessing the drug.‖ Katner v. State, 640 N.E.2d
388, 390 (Ind. Ct. App. 1994). Our own description of how the statute works under such
circumstances was this:
The State must show that the operator used (1) the vehicle to
transport an illicit substance or item listed in the statute, (2) for the
purpose of committing possession, attempting to commit
possession, or conspiring to possess the substance or item. The
second limitation, requiring the State to show transportation for a
specific purpose, serves an important function, i.e. avoiding
forfeiture where the operator of a vehicle coincidentally possesses
drug residue, but is not transporting the residue, or using the
vehicle in any other way to further possession or conspiracy to
possess.
Katner, 655 N.E.2d at 349 (emphasis added).
Serrano‘s truck was found to have cocaine residue in the front and back carpet and on the
top of a box of quarters. (Tr. at 83.) The State also presented various wire transfer
confirmations, deposit receipts and money orders (mainly gathered from the trash pulls), and
copies of Serrano‘s tax returns, by which it sought to establish the inference that Serrano was
living well beyond his means and thus must be involved in some sort of drug trade. The
resulting inferences were insufficient to establish by a preponderance that Serrano‘s drug
possession at the time he was arrested was furthered by the use of his vehicle or that Serrano‘s
vehicle was used for the purpose of possessing cocaine.
Put another way, the State‘s evidence does not compel a conclusion that the presence of
cocaine was anything more than ―incidental or fortuitous.‖ Katner, 655 N.E.2d at 348–49. The
State presented no evidence or link to any drug transactions or trade other than the initial
information from an anonymous informant that the grocery store was receiving large shipments
of drugs. Serrano admitted he was a cocaine user, and without expounding, it seems apparent
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that there are numerous ways that cocaine residue may have made its way into the truck that do
not involve the use of his vehicle in furthering the possession of cocaine.
Conclusion
The judgment of the trial court is reversed.
Dickson, Sullivan, Rucker, and David, JJ., concur.
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