REPUBLIC NATIONAL BANK OF MIAMI v. UNITED STATES
Legal provision: Article 1, Section 9, Paragraph 7: Appropriations Clause
Argument of Stanley A. Beiley
Chief Justice Rehnquist: We'll hear argument next in No. 91-767, Republic National Bank-of Miami v. United States.
Mr. Beiley, you may proceed whenever you're ready.
Mr. Beiley: Mr. Chief Justice, and may it please the Court:
This case concerns Federal appellate jurisdiction.
The issue is can the United States, by executing on a favorable currency forfeiture judgment, divest a Federal appellate court of appellate jurisdiction to decide the merits of a timely filed appeal.
The Eleventh Circuit below held that the Government had this power, which holding is contrary to the majority of the circuit courts of appeals which have addressed this very issue.
It is the Government's position in this case that the Government can bring a civil forfeiture lawsuit, win the case at trial, and then prevent an appellate court from deciding the merits of that appeal by transferring the funds in dispute from the territorial jurisdiction of the trial.
Unknown Speaker: I suppose, would its position also be that if pending the, pending the decision of the district court the property was sold and the proceeds were transferred to some other place the district court would lose jurisdiction too, I suppose?
Mr. Beiley: I believe that would follow from the Government's position.
That's certainly not the position that we advocate before this Court.
The late Judge Vance in his dissent in the Eleventh Circuit's One Lear Jet case, which dissent is now the basis for the rule in the majority of the circuits, referred to the majority opinion which adopted the Government's arguments being made before this Court as follows, and I quote.
It offends fundamental principles of fairness, it represents a departure from common sense, and it is analytically flawed.
We believe Judge Vance's comments are correct.
It is the bank's position in this case that the Government should not have the power to defeat a Federal court's appellate jurisdiction by its unilateral act of levying on a forfeiture judgment.
We believe that when the Government or any party brings a lawsuit in Federal court that party, as the plaintiff, submits itself to the court's in personam jurisdiction regardless of the nature of the underlying action.
The bank further submits that the nature of the trial court proceeding, whether you call that proceeding in rem, quasi in rem, or in personam, should have no bearing on the issue of Federal appellate jurisdiction.
Unknown Speaker: Well, this would be your view even in a classical admiralty action, Mr. Beiley, where everybody agrees it is a prototypical in rem action, nonetheless the Government there would submit itself to the personal jurisdiction of the court?
Mr. Beiley: It's not only my position, Your Honor, but it has been adopted by this Court in several of the cases cited in our brief in a pure admiralty case, the Feckler case, the British transport case, and several prize cases where the Government has intervened in admiralty in rem cases and then objected to cross claims being filed against it.
And this Court had held that when the United States intervenes it takes the position of a private suitor for all purposes for which justice may be done.
Unknown Speaker: Well, is that the same thing though as an admiralty action say initiated by the Government?
Mr. Beiley: Our position would be it would be the same, Your Honor, that the Government by initiating an action, as well as any plaintiff that initiates an action, submits itself to the court's in personam jurisdiction.
Unknown Speaker: Notwithstanding sovereign immunity?
Mr. Beiley: That is correct, Your Honor.
Sovereign immunity we believe would apply to suits against the Government, not to suits by the Government.
In your hypothetical, and Mr. Chief Justice, you asked about the Government initiating a lawsuit.
So that our position is--
Unknown Speaker: Well, Mr. Beiley, what about cases like the Brig Ann where the court has stated that the release of the res ends jurisdiction?
Mr. Beiley: --Justice O'Connor, first, we don't believe that ancient admiralty cases should be relevant to an issue of Federal appellate jurisdiction in a currency forfeiture suit.
But even under those old admiralty cases, our reading of the cases, I recognize the Government has a contrary interpretation.
Our reading of the traditional old admiralty cases, which we don't believe to be relevant, is that jurisdiction vests upon the initial seizure and that the continuous seizure or the continuous court control of the res, even in the old admiralty cases, is only required in two circumstances, none of which apply here.
Unknown Speaker: Well, for example if a third party absconds with the res, what happens then?
Mr. Beiley: In a traditional admiralty case if the only way that the court can fashion meaningful relief to the litigants is to have custody of the res and it's essential that that res be before the court to make a meaningful award, then you have this useless judgment exception, as we referred to it in the rules, and the court will not entertain a suit where it can't fashion any meaningful relief.
But that's not the case here.
The Government has the money.
The Government has had possession of the money from the time this lawsuit started.
So we don't believe--
Unknown Speaker: Mr. Beiley, you would say that even in the old admiralty cases, I think you would say this, that if the case had already been decided by the district court and was on appeal, as it is here, and at that point somebody absconded with the ship, the appeal would have proceeded, even in old admiralty cases.
Wouldn't you say that?
Do we have a case where that was the situation?
Mr. Beiley: --Our position would be if the absence of the ship in the ancient admiralty cases would make any judgment rendered by the appellate court, or on remand the trial court, meaningless, then the court under concepts of mootness or case in controversy could decline jurisdiction and dismiss the case.
But again that's not the situation in this case, when the Government has had the money from the inception of the suit, and even under their position has the money today in the Treasury.
Certainly meaningful relief can be fashioned in this case.
Unknown Speaker: So you're saying the old admiralty cases are no different from what you would say should apply here?
Mr. Beiley: I'm saying the old admiralty cases, Justice Scalia, should not have any relevance to currency cases.
To the extent they do I think the principles are the same.
Unknown Speaker: Well, I'm not sure I agree with you that they shouldn't have any relevance.
Why shouldn't they have any relevance?
Doesn't Congress, isn't our normal rule that Congress enacts against the background of the common law and we interpret their statutes against that background?
Mr. Beiley: Congress in this case said that the procedure of forfeiture cases shall as far as practicable conform to admiralty.
We interpret that as a position that procedurally you follow admiralty practice in forfeiture cases, but we do not read that as a declaration by Congress that every rule of substantive law that has ever been developed in admiralty cases ipso facto apply in forfeiture cases.
Nor do I know of any court that has so held.
Unknown Speaker: I suppose if the money in this case wasn't in the bank or in some place but it was in a bag and somebody stole it, I suppose then that would be, the court of appeals could dismiss the case?
Mr. Beiley: Does Your Honor's hypothetical mean stole it during the course of the trial court proceeding or after the judgment?
Unknown Speaker: After the judgment.
Mr. Beiley: Your Honor, that again gets to the issue, as the Government suggests, about the necessity for posting of bond.
That is a financial risk any litigant takes.
That shouldn't be a jurisdictional issue.
For example, if you wish to preserve the res put a bond to protect and insure the continuance of the presence.
And you have the right to do that if you wish to put up a bond.
Our point though that that's a financial risk.
It shouldn't be converted into a jurisdictional risk as the Government would seek to do in this case.
Unknown Speaker: Under your view the language in the Rio Grande was really quite unnecessary in which the court indicated that jurisdiction remained if the res was removed by some improper action or by accident or by fraud?
That was just quite unnecessary under your view of the case?
Mr. Beiley: No, Your Honor.
I think that case held that initially, that initial seizure vested jurisdiction, and that certainly an accidental or an improper removal of the res would not divest jurisdiction.
Unknown Speaker: Well, why would the court have qualified its language then to say that accidental or improper removal?
It would just say that any transfer of the res, any relinquishment or any disappearance of the res suffices.
Mr. Beiley: Your Honor, if the res were an immutable rule of jurisdiction, if a court lacked power to proceed to adjudicate a case without that res before it, then I would submit that any removal of the res for any reason, accidental, improper, act of God, or otherwise, should divest the court of jurisdiction.
I think the exception in essence highlights the original rule as we interpret the admiralty cases, which is that jurisdiction is complete upon initial seizure unless the removal would make the court's judgment meaningless and worthless because there's no basis to afford the parties relief.
Unknown Speaker: Well, but I'm still not quite sure what your explanation is for the accidental, fraudulent, or improper removal language.
It seems to me those are quite unnecessary qualifications.
Under your view the Rio Grande court should have said and any subsequent removal by the res is insufficient to destroy jurisdiction.
Mr. Beiley: With the two exceptions that I read out of the admiralty cases, Justice Kennedy--
Unknown Speaker: All right.
Mr. Beiley: --the useless judgment and the voluntary abandonment situation which came up in one of the other old admiralty cases.
Unknown Speaker: All right.
Didn't the Government make some agreement with the bank early on--
Mr. Beiley: Yes, Justice White, they did.
Unknown Speaker: --that they would not, that they could foreclose but they wouldn't, they would hold the proceeds subject to the bank's lien?
Mr. Beiley: Justice White, the agreement was that, the case started out as a forfeiture against a luxury home.
Unknown Speaker: Yes.
Mr. Beiley: During the course of the proceedings the Government got a sales offer and, on joint motion with my clients consent, asked the trial court to sell the property and take the proceeds from the property and put those proceeds in the court registry as a substitute for the realty.
Unknown Speaker: And did they do that?
Mr. Beiley: Yes, they did, Your Honor.
Unknown Speaker: Well, how did they ever get the proceeds out of the court registry?
Mr. Beiley: After the judgment became final they asked the marshall to wire transfer the funds by bookkeeping entries to the Treasury.
Unknown Speaker: I see.
So you think whatever they, you don't think there was an agreement then with the bank that they would hold the proceeds?
Mr. Beiley: Well, we think the Eleventh Circuit misinterpreted the stipulation.
That is not a focal point of our argument here because we--
Unknown Speaker: So you don't rely on any agreement whatsoever?
Mr. Beiley: --That's correct.
Unknown Speaker: Okay.
Mr. Beiley: We don't think this Court took jurisdiction, certiorari jurisdiction to interpret a stipulation.
Unknown Speaker: I would think you would, if it was sort of a breech of faith by the Government you would certainly be relying on it.
Mr. Beiley: The stipulation indicated that our rights would be without prejudice.
By wire transferring the funds we think we have been prejudiced but we are not relying on that as the basis for the relief that we seek before this Court.
Unknown Speaker: Are you going to deal in your oral argument, Mr. Beiley, with the Government's appropriations clause argument?
Mr. Beiley: Yes, Mr. Chief Justice.
In fact I will address that now.
The Government takes the position that now the funds somehow are in the Treasury, and that being in the Treasury the appropriations clause precludes the relief that we seek.
I think their argument fails for at least two reasons.
One, the issue of whether these funds are Government funds, it's my position, is only when this case is over, when the appeal is over.
We say it's our funds.
The Government says it's their funds.
That's the issue for a court on the merits to decide.
Unknown Speaker: But the money that you're talking about basically was remitted to the Treasury, was it not?
Mr. Beiley: Well, we don't concede that, Your Honor.
Money we believe to be a fungible asset.
We believe that all that happens when money moves from one account to the other are bookkeeping entries.
I think either the First or the Third Circuit or perhaps both expressed it best when they said to predicate jurisdiction on what Government pocket holds the money is seemingly an artful way to determine Federal or public jurisdiction.
Unknown Speaker: It would seem arguable at least that Congress drew a distinction, that there are different funds that Government deposits are housed in and once it goes into the Treasury it's subject to this appropriations clause limitation that it wouldn't be subject to if it simply remained in a different account.
Mr. Beiley: Mr. Chief Justice, if the Government's position on that point is correct, the Government in the classic in personam case, take a case, a student loan hypothetical where the Government sues, collects.
The defendant chooses not to supercede and the Government collects money from the defendant while the appeal is pending and sends the money to the Treasury, which they would have a right to do where you have an unsuperseded judgment.
Is the Government going to take the position in that case that the appropriations clause bars relief because in an in personam case the loser of a student loan claim did not supercede?
Unknown Speaker: Well, I suppose you have to look at the statute.
But it seems to me your argument that money is fungible, that it's an intangible, cuts against your appropriation arguments.
You were the, you began by saying that oh, this is not, I assume you meant this is not public money.
The title is contested to this.
But the minute you say that it's simply an accounting entry that is fungible then it seems to me that that weakens your argument under the appropriations clause.
Mr. Beiley: Your Honor, I don't think so.
I think that what happens when money is in a bank account, you have a debtor-creditor relationship, the bank and the depositor.
You have a situation here where the Treasury owes money to the Government which has not yet been resolved until this appeal is resolved on the merits.
As the First or the Third Circuit or perhaps both have said, the Government is everywhere so the obligation is owed everywhere.
But more importantly, and I didn't quite finish my answer to the appropriations clause question posed by the Chief Justice, to the extent we need statutory authority to get these funds we have two sets of statutes.
We have 28 U.S. Code 2465 which says quite plainly that forfeited property shall be returned to a successful claimant, and we have 28 U.S. Code 524 (c)(1)(d) which is the Department of Justice asset forfeiture funds which says one purpose for which forfeited funds should be used is to be paid to claimants.
So to the extent--
Unknown Speaker: What do you do with 1301(d) that says a law may be construed to make an appropriation only if the law specifically states that an appropriation is made?
Mr. Beiley: --Your Honor, we think both of those statutes set forth appropriations out of forfeited funds to be paid to claimants to those funds, such as the bank in this case.
There is nothing in those statutes that say that the statutes don't apply if the money is in the Treasury.
It says that forfeited funds shall be returned to the successful claimant.
Unknown Speaker: And you say that is language of specific appropriation?
Mr. Beiley: I believe it is, Your Honor.
Specific appropriation for use of forfeited funds.
If forfeited, if Congress says forfeited funds shall be paid to a successful claimant the fact that the Government has levied and put the funds in the Treasury doesn't change that those funds can serve that purpose.
Unknown Speaker: I suppose if this hadn't been treated as a jurisdictional matter and the court of appeals had decided the case against the Government it wouldn't make any difference whether the funds were then in the Treasury or not.
The Government would have to pay a judgment.
Mr. Beiley: That's certainly our position, Your Honor.
Unknown Speaker: So it, it really doesn't make... even if they had transferred the money they might have to pay a judgment, just like the Government has to pay judgments a lot of times.
Mr. Beiley: That is our position.
Unknown Speaker: When they lose a tax case sometimes they have to--
Mr. Beiley, can I ask you kind of, well just a question?
Do you understand the Government and the court of appeals to be taking the position the case is moot?
Mr. Beiley: They, in their brief they take the position that there are mootness concerns.
They don't quite come out and say that the case is moot but they suggest mootness concerns.
We don't think the case is moot.
Unknown Speaker: It seems to me it either, if it were moot we ought to vacate the judgment below, would be the normal disposition, and then you'd get your money back.
That's our normal disposition with moot cases, and I'm not quite clear what your understanding is or what their understanding is of the mootness case.
Mr. Beiley: I'm not particularly certain as to what the Government means why the case is moot.
If their position is that the appropriations clause makes it moot, I believe I answered that contention a moment ago.
Unknown Speaker: I thought, thinking that their theory was taking the res out of the territorial jurisdiction of the district rendered the case non-justiciable or moot, which would be true if the plaintiff were still trying to get the money out of the res, but this is the opposite here.
Mr. Beiley: That is correct.
Unknown Speaker: And if you vacate it you, it seems to me... I suppose I should ask Government counsel this question.
Mr. Beiley: The Government's suggestion in this case that the solution to this jurisdictional problem is the posting of a bond or the attention of a stay, and with all respect to the Government, we believe simply makes no sense.
The sole purpose of a supersedeas bond historically and otherwise is to assure a successful trial litigant that its judgment will be paid if the execution on that judgment is delayed while an appeal goes forward.
There's never any risk of non payment to the Government in a civil forfeiture case because the Government has possession of the property.
They had it at the inception of the suit and they had it after the suit was over.
A bond would serve no useful purpose whatsoever.
Nor is a stay, which is a discretionary ruling by a trial court, a very sensible prerequisite to Federal appellate jurisdiction because Federal appellate jurisdiction should not depend upon trial courts discretionary rulings.
Unknown Speaker: Well, doesn't a bond, doesn't the supersedeas bond ordinarily provide not just to secure the principal but interest as well for damages for a delay, whatever you want to call it?
Mr. Beiley: Traditionally the amount of a supersedeas bond would cover future interest on the principal sum of money and perhaps appellate costs.
That is correct, Mr. Chief Justice.
Unknown Speaker: Well, so just holding the property as the Government does would not allow it necessarily to recover those elements.
Mr. Beiley: There's nothing that prohibited the Government from putting those funds in an interest bearing account.
We would have no objection to the Government levying on those funds and investing it in anyway they saw fit.
Our position is that that shouldn't preclude us from taking an appeal to a Federal appellate court.
If the Government wished to invest those funds and earn interest they are perfectly free to do so.
Unknown Speaker: And you don't really care whether they move it to the Treasury or not as long as you get your appeal.
Mr. Beiley: That is correct.
Unknown Speaker: And if you win the case you would think the Government would pay you.
Mr. Beiley: We would think so.
The position that we assert, that the plaintiff, any plaintiff, when it brings a case in court submits itself to the in personam jurisdiction of the court, we believe applies here.
Very early on this Court in two old cases, Adam v. Saenger and Nations v. Johnson, held, and I don't think I can state it any better, that no rule can be a sound one which will deprive a party of his right to have his case submitted to an appellate court.
Adam/Saenger, Nations/Johnson, hold that when the plaintiff seeks relief that that party is subject to the court's jurisdiction for all purposes for which justice is required.
Unknown Speaker: You don't say the Constitution guarantees you the right to appeal, do you?
Mr. Beiley: No, Justice White.
The right to appeal is not a constitutional right, but I certainly believe it to be a very fundamental right of a Federal litigant.
Unknown Speaker: Well, you've got it by statute, I guess.
Mr. Beiley: That is correct.
Congress, in prescribing the appellate jurisdiction of Federal courts, in 28 U.S. Code 1291 states that Federal courts of appeal have appellate jurisdiction over trial court final judgments.
What we believe the Government is doing here is attempting by its unilateral act of levying on a judgment to interfere with that congressional appellate jurisdiction mandate, which we believe to be improper.
Unknown Speaker: Well, but you certainly don't have a right to appeal where some event occurs that simply causes there no longer to be a case or controversy, right?
Mr. Beiley: That is correct, Justice Scalia, but that is not the case here.
Unknown Speaker: Well, but why wouldn't the same, why wouldn't the same answer be given if indeed the problem here is that the lower court can no longer enforce its judgment?
Mr. Beiley: We believe, Your Honor, that the lower court can indeed, if this case were decided on the merits in favor of my bank, decide this case on the merits and enter--
Unknown Speaker: --Enter what?
A judgment against the United States?
Mr. Beiley: --Yeah.
Direct the Government under restitution principles in the two statutes cited before to give us those forfeited, those portions of the forfeited funds to which my bank is--
Unknown Speaker: What are the two statutes that you're relying on for that?
Mr. Beiley: --I'm relying on 28 U.S. Code 2465 which holds that upon a successful judgment in favor of a claimant forfeited funds shall be returned to the claimant, and 28 U.S. Code 524(c)(1)(d).
Unknown Speaker: That's of course not an appropriation, that provision?
Mr. Beiley: We believe it is an appropriation with respect to forfeited funds.
It directs the allocation of forfeited funds to a successful claimant.
What the Government has possession of in this case is forfeited funds.
We are seeking to get the portion back that we claim we're entitled to.
Unknown Speaker: What was the issue between you and the Government about the right to have your lien recognized?
Mr. Beiley: Under civil forfeiture law, Justice White, the burden of proof is on a claimant to property, such as a mortgagee, to prove by a preponderance of the evidence that that party had no actual knowledge of the underlying transactions.
Unknown Speaker: So you are claiming to be an innocent owner?
Mr. Beiley: That's correct.
We were claiming innocent ownership, and that was the dispute of the Government.
Unknown Speaker: And the district court found against you?
Mr. Beiley: The district court found against us.
Unknown Speaker: And you wanted to litigate that in the court of appeals?
Mr. Beiley: We took that issue up.
We felt there were clearly erroneous factual findings of the trial court and that the trial court applied the wrong legal standard.
Unknown Speaker: Let's assume that the two statutes you rely on are not appropriations.
Do you lose?
Mr. Beiley: I don't believe so, Justice Souter.
Unknown Speaker: Why not?
Mr. Beiley: Those statutes direct how forfeited funds shall be paid.
I don't think the Government can avoid the impact of that case by bringing a suit to acquire forfeited funds and put it into the Treasury.
Unknown Speaker: So you're saying in effect that the statute assume, or those statutes on my assumption, those statutes presuppose that the Government will not have put the money in the Treasury and therefore the deposit in the Treasury would be a mistake and therefore legally they would not be subject to the appropriations clause.
Is that what you're saying?
Mr. Beiley: I believe those statutes would apply whether the funds remained in district court in the marshall's account or were levied upon as they were done in this case and wire transferred or by bookkeeping entries put into the Treasury account.
Unknown Speaker: Well, if they're in the Treasury why aren't the statutes unconstitutional as violative of the appropriations clause?
Mr. Beiley: Because Congress--
Unknown Speaker: If they are properly in the Treasury, strike that.
If they are properly in the Treasury why aren't the statutes in excess of congressional power and in violation of the appropriations clause?
Mr. Beiley: --We believe them to be, the statutes to be an appropriation as to what use can be made of forfeited--
Unknown Speaker: But that's contrary to my assumption.
I said if we assume they are not appropriations, Justice Scalia's question, then do you lose?
And you're telling me why you don't.
But I think what you're, as I understand it what you're telling me is that they could not be regarded as appropriations... I'm sorry, that they, that the funds could not be regarded as properly in the Treasury because their transfer to the Treasury was mistaken.
Mr. Beiley: --Justice Souter, if the import of Your Honor's question is if these two statutes were unconstitutional would I be making a different argument, we would not be making, we would be making an argument that would lead to the same result, and the argument we would be urging, in addition to the one we urge with the statutes, is that the plaintiff is subject to the court's in personam jurisdiction.
Unknown Speaker: You contend that if you get a judgment on appeal permitting the entry by the district court of an order for return of a property that this would constitute within the meaning of this statute the compromise of a valid lien or mortgage against property that has been forfeited?
That's a very strange way to--
Mr. Beiley: I don't believe so.
The very rulings or interpretations of that statute, which we cite in our brief, by the Government show that one of those purposes is to pay valid mortgages against the property.
Unknown Speaker: --This is not a mortgage against the property.
You're saying you want a judgment for return, you want a judgment for money out of the Treasury.
Mr. Beiley: --We want our mortgage on property recognized, and the fact that that money has been turned over to the Treasury we don't think in anyway changes the result.
If I may, Mr. Chief Justice, reserve the remaining time for rebuttal.
Unknown Speaker: Very well, Mr. Beiley.
Mr. Long, we'll hear from you.
Argument of Robert A. Long, Jr.
Mr. Long: Thank you, Mr. Chief Justice, and may it please the Court:
The question in this case is whether the court of appeals has jurisdiction over an appeal when the district court has entered a final judgment of forfeiture in an in rem proceeding, the final judgment has not been stayed and the res has been released from the district court's control and deposited in the United States Treasury.
Unknown Speaker: Mr. Long, can I ask you right at that point what was the, was there jurisdiction at the time the notice of appeal was taken, which as I understand it was prior to the transfer of the res?
Mr. Long: Yes.
We would say yes, at that point the res was still--
Unknown Speaker: The jurisdiction was in the court of appeals then.
And supposing the transfer had been made after the opinion was announced but before the mandate went down?
Mr. Long: --I'm sorry.
Unknown Speaker: Suppose the transfer were not made when it was in this case but after the case had been argued and the court had deliberated on the case and announced from the bench they were going to rule in favor of the other side, but the mandate had not gone down, and then you transferred?
Mr. Long: --I think the mandate would be the court's opinion in that case--
Unknown Speaker: No, a mandate is not the court's opinion.
Mr. Long: --Well, the mandate would be the court's decision.
I think if the res left the court's jurisdiction before the court decided that would deprive the court of jurisdiction to control the disposition of the res.
You catch me... I'm not exactly sure what the effect of a mandate is when we run into it in our work.
Unknown Speaker: See, I was always under the impression that the jurisdictional act for vesting jurisdiction in the court of appeals was filing the notice of appeal.
I thought as long as there was a controversy between the parties the court of appeals would retain jurisdiction.
Mr. Long: That is generally true, but--
Unknown Speaker: What is your strongest case to the contrary of that proposition?
Mr. Long: --I think the Brig Ann, the Rio Grande, and a number of cases cited in footnote 3 of our brief are all strong cases for the proposition that in an in rem proceeding, which is a different animal, different from the normal in personam proceeding, the court's jurisdiction, the court's--
Unknown Speaker: The appellate court's jurisdiction was defeated by a transfer after the appellate court had acquired jurisdiction.
Mr. Long: --Well, that was what was at issue in the Rio Grande case.
The court recognized an exception, we view it as a rather narrow exception where the res is improperly or fraudulently removed from the court's control.
Unknown Speaker: Why does that make a difference?
Mr. Long: Well, I think that the court was unwilling to allow an unjustice to be, an injustice to be done in that case so it was willing to modify the rule to that extent.
Unknown Speaker: Why is that any greater injustice than this, if they are right on the merits?
Mr. Long: Well, we feel that there was no injustice in this case--
Unknown Speaker: I understand.
Mr. Long: --and I'd like to address that point at some length.
Unknown Speaker: But if they were right on the merits there was an injustice.
Mr. Long: No, because we feel that they had reasonable steps that they could have taken to preserve the court's jurisdiction on appeal.
They didn't take those steps, and since they didn't take simple steps that were available to them it is not unjust to end the case at this stage.
And I would like to address that as one of the--
Unknown Speaker: Could I ask you--
Mr. Long: --Yes.
Unknown Speaker: --What did the, did the district court do something affirmatively to release the funds other than just enter the judgment for the United States?
Mr. Long: Yes, it did, Your Honor.
Unknown Speaker: What did it say?
Mr. Long: It entered an order requiring the marshall to dispose of the res in accordance with law, and that's precisely what the Government did.
It disposed of the res in accordance with law by depositing it in the Treasury.
Unknown Speaker: Mr. Long, if contrary to the facts in this case the Government had had custody of the funds during the proceedings in the trial court, say by agreement of the parties or something you put it in an interest bearing account and during the pendency of those proceedings the Government improperly transferred the funds to the Treasury, your position would be the same, wouldn't it?
The Government lawyer would be in hot water, we'll accept that, but your position would be the same on the, on mooting, in effect mooting the case by loss of the res, wouldn't it?
Mr. Long: Our position would be the same under the appropriations clause.
Unknown Speaker: Yeah.
Mr. Long: Once money is in the Treasury, even if it gets in there by mistake--
Unknown Speaker: And that would be dispositive of the case for you.
Mr. Long: --That would be dispositive of the case under the Rio Grande, this old decision that there is an exception to the normal rules of in rem jurisdiction for improper removals, but that can't trump the appropriations clause.
Unknown Speaker: Well, then whenever the appropriations clause is involved the so-called injustice exception is simply unavailable?
Mr. Long: That's our position.
The appropriations clause is a very clear, simple constitutional command.
There must be an appropriation.
Unknown Speaker: Is there no cause of action, I mean there are appropriations for the payments of judgments rendered by the court of claims under the Tucker Act and under other legislation.
Is there such a big hole in our judicial system that the Government skips off with this money and there's no cause of action?
Mr. Long: Well, again we don't regard it as a big hole because we think there were fairly simple steps that the petitioner could have taken here and the law was clear in the Eleventh Circuit.
They didn't take those steps so we don't feel that there is a gap that needs filling.
Unknown Speaker: Well, I think it's a gap if the Government is sitting on money that it really shouldn't have.
You would acknowledge... let's assume that the judgment below was wrong, should have been reversed on appeal, the Government has money that it shouldn't have.
Mr. Long: Well, it is often the case, Justice Scalia, in the case involving an injunction, for example.
If the losing party fails to get a stay of the judgment a final judgment can be executed and there may be irreversible consequences of that.
Unknown Speaker: Let's assume that I consider this an unjust enrichment of the Government.
Mr. Long: All right.
Unknown Speaker: If we reversed the district court order by Munsingware the case, just set it aside, take you at your word and say there's no longer any jurisdiction in the courts, since there isn't the case is moot, would there be a cause of action for return of the money under any Federal statute?
Mr. Long: It is possible--
Unknown Speaker: A separate cause of action.
Mr. Long: --There might be a cause of action against a Government official.
We don't think there would be any action against the United States.
The Tucker Act that you mentioned in the claims court, this Court has said there has to be a substantive right to recover money damages against the United States.
Unknown Speaker: Yes, but I think you have to sustain the fact that the court of appeals doesn't have any jurisdiction before you even get to the appropriations clause because if the court of appeals had retained jurisdiction rightly in this case and yet the money was gone, and the court of appeals decided that you lost the case and they entered judgment against the United States.
I suppose the United States is always getting judgments entered against it which they have to pay.
Mr. Long: That's true, but the answer to that question depends on the basic distinction again between a true in rem proceeding, which this is, Congress has said it is a true in rem proceeding.
Unknown Speaker: So you agree then that you must, the appropriations clause cannot, cannot finish this case without your winning the jurisdictional point?
Mr. Long: No, I don't.
I think the appropriations clause--
Unknown Speaker: Well, I can't imagine... if the court of appeals had jurisdiction and could decide against you, you're going to pay the judgment, no matter where the money is.
Mr. Long: --Well, as a practical matter, yes, of course.
If this Court--
Unknown Speaker: All right, so you have to convince us first that the court of appeals didn't have jurisdiction.
Mr. Long: --Well, but you may not want to put it in terms of jurisdiction, but the court does not have power to enter an order requiring a payment from the Treasury that has not been authorized by Congress in an appropriations act.
Unknown Speaker: And contrary-wise Congress passes a bill appropriating money to pay judgments rendered against the United States.
Mr. Long: Well, that's right.
There is the judgment fund, but again that has to, as the court said in OPM against Richmond, there has to be a statute that gives you a substantive right to damages money recovery against the United States.
But again let me make the basic point, it is a fundamental feature of a true in rem action that the defendant is the res.
That has been established since before the time of the Constitution.
A judgment, an in rem judgment must be satisfied, if at all, out of the res.
That's why once the res has left the court's control it really doesn't do to say well, it can simply enter a judgment, you can get it from some place.
Unknown Speaker: Why is that the case?
In an in personam jurisdiction the court acquires jurisdiction because it has the body of the defendant, right, and it can exercise control over them.
If he leaves the jurisdiction we don't say oh, God, he's gone now, the court can't do anything so the case is over.
Why should it be any different for in rem jurisdiction?
Mr. Long: That is a distinction, Justice Scalia.
I think the reason for it, it's a long established historical distinction.
The reason is that an in rem judgment has to be satisfied out of a particular piece of property.
An in personam judgment could be satisfied out of any property or person located anywhere.
Unknown Speaker: By a particular--
Mr. Long: So the risk of having an unenforceable judgment is much higher.
I mean, the classic case is the ship that sails, the court releases--
Unknown Speaker: --Yes, but you've got your parties reversed.
The plaintiff has to satisfy the judgment out of the res.
The Government is the plaintiff here.
It couldn't of course satisfy a judgment if the res went elsewhere.
But the defendant doesn't have to satisfy any judgment out of the res, he's just to keep what he owns.
Mr. Long: --Well, it is true that the Government has taken the property and has put it in the Treasury, but it is no longer in the court's control.
Unknown Speaker: What should the amount of the bond have been in this case?
Mr. Long: We think the amount of the bond should have been sufficient to insure that the Government was compensated for the costs of an appeal.
Unknown Speaker: And would that have preserved jurisdiction in the court?
Mr. Long: Oh yes, certainly.
Unknown Speaker: Even if the bond was less than the amount of the forfeited proceeds, suddenly you have solved what you consider to be the jurisdictional defect?
Mr. Long: Well, I mean, I haven't solved it.
That's what the Federal Rules of Civil Procedure Rule 62 provides for.
The amount of the bond is--
Unknown Speaker: So the amount, the amount of the bond need not be the amount of the res, and yet the res is now constructively, I take it, before the court simply because a bond for costs has been posted?
Mr. Long: --Well, that is the requirement of the rule.
The amount of the bond could be greater.
We would think in some cases, probably in most cases the court, recognizing that the Government held the property, would require a lesser bond.
Unknown Speaker: Well how would that satisfy your concerns under the appropriations clause?
Mr. Long: Well, we would not be entitled to remove the property.
The purpose of the bond results in a stay, and then the Government is not allowed to execute the judgment and the property stays within the control of the court.
Unknown Speaker: But you also agree if by some hook or crook you had your hands on the property and the court did not in my hypo and you were investing it by agreement, a bond could have been filed and if you then improperly transferred it to the Treasury you're going to be making the same argument you're making today.
Mr. Long: Then there is an appropriations clause problem.
If that case were to arise the attorney general would exercise his discretion to return the property to the claimant or return it to the control of the court.
But yes, there is an appropriations clause problem and it arises whether or not the money gets into the Treasury accidentally or improperly.
Unknown Speaker: How could the attorney general exercise his discretion?
You mean in violation of the appropriations clause?
Mr. Long: No, under, the asset forfeiture fund is a fund in the Treasury and Congress has provided that money may be paid out for certain purposes.
Unknown Speaker: For you, but not for the other side, you say.
I mean, you say that they can't use it but the attorney general can use it.
Mr. Long: Well, one of the purposes provided by Congress is that the attorney general in his discretion may use the money to compromise valid liens and mortgages.
And if a mistake had been made we would certainly consider correcting it.
Unknown Speaker: You would acknowledge then that if this case came out against the Government that he'd be able to use that same fund to find the money to pay the claimants here, isn't that right?
Mr. Long: Well, no, because there is no statute that authorizes an appropriation for that purpose.
A statute, as you said yourself a moment ago, a statute giving the attorney general discretion to do something is not the same as an appropriation paying judgments.
Unknown Speaker: So you're saying that it is the discretionary character of the attorney general's act that defeats it?
Mr. Long: Yes, it is not, it does not meet the requirement of the appropriations clause because it does not clearly provide for the payment of a judgment in this case.
Unknown Speaker: Does the appropriations clause apply simply to public monies?
Why are these public monies if the title to them is contested?
Mr. Long: Because Congress has provided that this is a fund in the Treasury and has provided that payments from the fund have to be made pursuant to an appropriation by Congress.
Unknown Speaker: But you were identifying the funds in an almost quasi physical sense.
You were saying once something is in the Treasury it is entirely beside the point of the appropriations clause whether it was proper to transfer it there or not, and the point, I think the point of Justice Kennedy's question is isn't there some concept of what ought or ought not to be in the Treasury that should be applied before the appropriations clause argument would be appropriate.
Mr. Long: Well, our position is that if money is in the Treasury then it can only be gotten out with an appropriation, and I think that's--
Unknown Speaker: So that if Government officials steal money, if Government officials overcharge taxpayers and so on, knowingly and fraudulently, and the money gets in the Treasury that's it, subject to the appropriations clause?
Mr. Long: --The money can be paid out only pursuant to an appropriation, that's right, even in an extreme case.
It's a clear and simple constitutional command.
Let me back up, if I could, and take just a minute to summarize our argument.
I intended to do this at the beginning and I think I can give our entire position in a nutshell.
We have basically just four points that we think establish our case.
First, the first point is that under a long established rule applicable to true in rem proceedings the court's jurisdiction depends on its control of the res.
An in rem judgment must be satisfied if at all from the res--
Unknown Speaker: May I just ask right there, on the Rio Grande case that was jurisdiction to grant a judgment to the libellot, not to the libelee.
Are there any cases where the jurisdiction, where you have the same status of the parties that you have in this case, where it's the defendant who is claiming there is still power to correct an erroneous judgment?
Mr. Long: --Well, I'm not aware of any admiralty case, but the Shaw case is an in rem proceeding.
That was United States against Shaw, it's cited in our brief, 309 U.S. 495.
That was an in rem proceeding and there the United States was the plaintiff, or it came in and made a claim, and the question was well, did it therefore submit to the court's jurisdiction and the answer was no, that--
Unknown Speaker: For what purpose?
Jurisdiction for purpose of--
Mr. Long: --For purposes of a counter claim.
Unknown Speaker: --But not for the purpose of deciding the merits of the dispute that the Government had initiated.
Mr. Long: Well, it was its counter claim and set off, but again in order to get money out of the Treasury or to get a judgment against the United States there would have to be a right of action in personam.
Then we move out of the specialized world of the in rem proceeding, and that's really a different claim.
A claim against the United States for money is not the same as a claim for the return of this property.
Unknown Speaker: Well, I understand, but what I'm suggesting is you don't have a single United States Supreme Court case that supports the first proposition you are advancing here.
There's no case that's on all fours with the position here.
Mr. Long: We do not have a case that's on all fours, but respectfully I think the Brig Ann and the Rio Grande are quite strong support for us.
Unknown Speaker: The Rio Grande would support you if they had taken the money away from the district court before you got your judgment, and you would be absolutely right.
Mr. Long: Well, I can't imagine that if the other side had happened to get control of the ship and go off with it that the result would have been any different.
What the court was concerned about in that case was that there was a clear violation of statute.
The bond, appeal bond was posted in that case and the court made a great deal of that and said it was clearly contrary to law for the property to be carried off.
It didn't matter which party carried it off in that case.
So our first point again is that an in rem proceeding, the judgment must be satisfied out of the res.
If the court can't control the res it cannot enforce a judgment in rem.
Our second point is that the United States did not consent to the entry of a judgment in personam when its agents filed an in rem forfeiture proceeding.
Congress has not authorized the entry of a judgment in personam in petitioner's favor, and there is no in rem exception to sovereign immunity.
Third, petitioner's appeal is barred by the appropriations clause.
Proceeds of the sale of the res have been deposited in the Treasury and Congress has not appropriated funds to pay a judgment for petitioner.
And finally, there is nothing unfair or unjust about requiring petitioner to take reasonable steps to preserve the court's jurisdiction on appeal.
Appellants are often required to take such steps.
Losing claimants can obtain an automatic stay by posting a bond which protects the Government against the costs of an appeal, including the costs of storing the property, and if a losing claimant cannot afford to post a bond the court has discretion to stay the judgment without requiring a bond.
Unknown Speaker: Mr. Long, are you simply saying that the court of appeals was without jurisdiction period, or are you saying that this case is actually moot?
Mr. Long: Well, the case is over.
We think it's not, there has been a final judgment, it has been executed, there is nothing left for the court to do.
Unknown Speaker: Supposing in this case that the bank had simply failed to file a timely notice of appeal to the court of appeals.
Now, the court of appeals would have been without jurisdiction, the case would have been over, yet no one would have suggested the case was moot.
Mr. Long: We think this case is exactly parallel.
In Munsingware for example, if I recall it correctly, the court refused to enter a Munsingware order for the Government because it said we had failed to take simple steps we could have taken to preserve our rights.
That's precisely the situation we have here and so--
Unknown Speaker: So you say, you do not say the case is moot?
Mr. Long: --No.
The case is simply over.
There has been a final judgment, we have executed it.
There is nothing left that a court of appeals can do.
But the original judgment is not moot.
And of course this Court has jurisdiction to decide the jurisdictional question, that's properly before the Court.
Petitioner really doesn't contend that it comes within a recognized exception to the jurisdictional rule, but instead argues that this Court should basically jettison the rule that in rem jurisdiction requires the court to control the res.
We urge the Court to reject that suggestion, which is a radical one.
The rule that the court must control the res in an in rem proceeding serves the important purpose of preventing Federal courts from issuing unenforceable judgments.
The rule is regularly applied by the courts of appeals, cases cited in our brief including the cases with the, circuits with the greatest familiarity with admiralty such as the Fifth Circuit, the Ninth Circuit, and the Eleventh Circuit.
Moreover, and this is a central point of our position, Congress has legislated in this area on the assumption that the traditional rules of in rem jurisdiction apply in this area unless modified by statute.
Congress has provided in 28 USC 2461(b) that forfeiture proceedings shall conform as near as may be to in rem proceedings in admiralty unless otherwise provided by act of Congress.
Thus the courts are not at liberty to develop one set of jurisdictional rules for forfeiture proceedings and a different set of rules for admiralty cases.
And in addition Congress clearly understands the rules of in rem jurisdiction and has shown that it modifies them when it chooses to do so.
For example, it modified the traditional rule in a customs statute, 19 USC 1605.
That's discussed in our brief.
The purpose of that modification was to alter the traditional rule that Congress understood would otherwise apply, that the res must remain in the judicial district while the in rem procedure was pending.
Unknown Speaker: So you would then, you would come out the same way if a ship sitting in port were the subject of the action and the Government wins and it just, it's a hotly contested-case and then the Government just sails the ship away.
The former owner of the ship can't do a thing about it?
Mr. Long: Well, whether it's the Government or another party, if there is a final order that allows the party to do that, allows the Government to do it in your hypothetical, any final judgment can be executed.
And once the ship has sailed to South America or wherever the long standing rule in admiralty cases is that the court cannot do anything because it can't control the disposition of a ship in South America.
Now if it were done improperly or fraudulently the court could continue to exercise jurisdiction under the Rio Grande as long as the, because the appropriations clause problem wouldn't arise in that case.
Unknown Speaker: Why do you think it can do that if the ship is gone?
Mr. Long: Well, the court made an exception to its rule.
There is a risk of unenforceable judgments, certainly.
The court, it doesn't discuss this in the Rio Grande, it's an old decision, but the court--
Unknown Speaker: Let's assume the ship has gone to South America but the court, the court of appeals says the removal was absolutely fraudulent.
Now, what's it going to do?
Mr. Long: --Well, under the Rio Grande the court, the appeals court would decide the appeal and would, it might issue a judgment.
A judgment might be--
Unknown Speaker: Against whom?
Mr. Long: --It could be against the ship or it could be--
Unknown Speaker: Could it be against the person who illegally removed it?
Mr. Long: --Well, I was assuming that the owner of the ship took it away.
Yes, it could be, it could require the return--
Unknown Speaker: The owner of the ship only because the district court ruled that it was forfeitable.
Mr. Long: --Well, again there's a question.
An in rem judgment would have to be a judgment against the ship.
The court might also enter, I suppose, an in personam judgment against the plaintiff on the theory that the plaintiff, now not the Government so not subject to sovereign immunity, had consented to the, had consented to the jurisdiction of the court--
Unknown Speaker: Was the United States in this case?
Mr. Long: --Well, the United States is the plaintiff in this case, but again the United States is subject to sovereign immunity and can only be sued--
Unknown Speaker: Well, what would you say if it were, if the court of appeals had said we have judgment, we have jurisdiction here because we think the Government illegally removed the funds?
Let's assume there had been a stay which the Government did not observe.
But the money is in the Treasury.
So what does the court of appeals do?
Mr. Long: --Well, in the exact hypothetical you give the court of appeals cannot issue a judgment that requires payment out of the Treasury without an appropriation by Congress.
Unknown Speaker: I agree with that, but what does it do against the... can the court of appeals then issue a judgment against the United States which would be satisfied in the normal course?
Mr. Long: No, because there is no statute that--
Unknown Speaker: So there is no exception for illegal Government action in removing the res?
Mr. Long: --Well, if it's a res that's not in the Treasury, yes, there would be again because then the appropriations clause wouldn't apply.
Unknown Speaker: So even putting up a stay in a supersedeas bond would not have guaranteed the bank a right to have its appeal heard here if the Government chose to disregard the stay?
Mr. Long: Well, in that case the Government would have been acting illegally and--
Unknown Speaker: But I thought you told Justice White it didn't make any difference, that the court of appeals still had no jurisdiction.
Mr. Long: --Well, as we read the appropriations clause there is no exception for money that gets--
Unknown Speaker: But your first point is that the court of appeals had no jurisdiction.
If the court of appeals could enter judgment against the Government on the merits, very likely a judgment like that could have been satisfied out of the judgments fund, might it not, without having to violate the appropriations clause?
Mr. Long: --Well, again, this Court has said in cases such as OPM against Richmond that the judgment fund is not an all purpose fund that allows a court to enter judgment against the United States.
There has to be another statute that gives a substantive right to recovery.
Now, if there was something illegal or fraudulent, that is not the case we have here, I think it's quite likely there would be some sort of way to sue an official of the Government.
There may be ways that that could be done, and certainly the attorney general has discretion to correct an error.
But that's not the case here.
And let me close, if I could, by emphasizing, we have tried to convince you that there would be great difficulty in making this case come out for petitioner, that it would require changing subtle principles of in rem jurisdiction--
Unknown Speaker: Well, wait--
--There's no, you admitted there's... no case like this has ever come up before in this Court.
We don't have to overrule a single case to disagree with you.
Mr. Long: --With respect, Justice Stevens, I don't think I admitted that.
I think the Brig Ann and the Rio Grande--
Unknown Speaker: Well, what case is like this one that you can cite?
Mr. Long: --I think the Rio Grande is quite similar.
Unknown Speaker: That's the closest, and that's where they could not have recovered, not... it's the exact opposite of this case.
Mr. Long: Well, again, I think it wouldn't have made any difference if the other party had taken the property away.
But there's a sovereign immunity problem, there's an appropriations clause problem.
If there were a grave injustice in this case perhaps the Court should strain to change the rule, but Congress has demonstrated that it knows about these rules and will change them if it wants to.
In fact Congress is considering legislation right now that's supported by the administration that would change this rule.
We think that the decision should be left to Congress.
This is, after all, a rule that would have the effect of expanding the limited jurisdiction of Federal courts.
And finally, what happened here was not particularly unfair to the bank.
They could have obtained an automatic stay by posting a bond.
They didn't do that.
They have not offered any excuse for doing that.
They are wrong in contending that the bond serves no purpose.
It serves to compensate the Government for the costs of the appeal and the costs of maintaining property.
A lot of these cases involve boats and airplanes.
The costs are quite significant.
And it also deters frivolous appeals.
There is actually, Congress expressly requires a bond, by the way, when an administrative forfeiture proceeding is converted into a judicial forfeiture proceeding.
So Congress doesn't think that a bond is useless when the Government has the property.
There is no merit to petitioner's contention that it didn't have enough time to decide whether to appeal.
It had as much time as any criminal defendant has, and in injunction cases there is no automatic stay at all.
So some parties are in a worse position than this and have to act immediately to obtain a stay.
The Government finds itself in that position in FOIA cases, for example.
And there is no basis for the speculation that there will be an avalanche of emergency stay applications if the ordinary established rules in in rem proceedings are allowed to continue in effect.
These are the rules that apply in the Fifth, Seventh, Ninth, and Eleventh Circuits, the circuits that have the most experience with admiralty proceedings, and there has been no avalanche of emergency stays or no problem with courts not ruling on the stays in a timely fashion.
As this Court said in Halstrom against Hillimuck County, the equities do not weigh in favor of petitioners whose procedural default is caused by their failure to take the minimal steps necessary to preserve their claims.
Unknown Speaker: Thank you, Mr. Long.
Mr. Beiley, you have 3 minutes remaining.
Rebuttal of Stanley A. Beiley
Mr. Beiley: I would like to conclude with a very brief statement.
We believe that appellate review, though not a constitutional right, is certainly a very basic, fundamental, and important right to Federal litigants.
We believe it is a right that is worth preserving.
We respectfully ask this honorable Court to preserve it here.
The Eleventh Circuit's decision should be reversed and the case sent back to the Eleventh Circuit to reinstate the appeal and decide my client's case on the merits.
Unknown Speaker: What is supposed to happen then?
Mr. Beiley: We would ask the Eleventh Circuit to order the Government out of the forfeited funds to pay us those funds to which we are entitled on our mortgage, Your Honor.
Unknown Speaker: You wouldn't care whether you were asking for the return of the specific funds or not, I suppose.
Mr. Beiley: Any Government money is fine with us.
Unknown Speaker: And you don't think you need the consent of the Government to have a judgment like that entered?
Mr. Beiley: We do not, Justice White.
I thank the Court very much for its consideration.
Chief Justice Rehnquist: Thank you, Mr. Beiley.
The case is submitted.