Farley v. $168,400.97

259 A.2d 201, 55 N.J. 31, 1969 N.J. LEXIS 147, 24 A.F.T.R.2d (RIA) 5955
Supreme Court of New Jersey·Decided November 17, 1969·Published·Cited by 38 cases

Opinion

The opinion of the Court was delivered by

Weintraub, C. J.

This action involves competing claims of the County of Hudson and of the United States to the sum of $168,400.97. The County contends the moneys were forfeited to it by their use in the gambling activities of Joseph Y. Moriarty. The United States claims it holds a lien upon the moneys for taxes assessed against Moriarty.

*34 The County brought this proceeding to establish its title to the fund. The United States removed the matter to the United States District Court which, however, remanded it to the State court. State v. Moriarity, 268 F. Supp. 546 (N. J. D. C. 1967). The cause was then tried, resulting in a judgment for the County. 97 N. J. Super. 458 (Law. Div. 1967). The Appellate Division affirmed, 102 N. J. Super. 579 (App. Div. 1968), and we granted the petition of the United States for certification, 53 N. J. 273 (1969).

For many years Moriarty was a notorious “kingpin” in the “numbers racket” in and around Jersey City. His criminal record in that field dates from the 1930s. On March 2, 1962 he was sentenced to State Prison on a guilty plea to possession of lottery slips, and he remained in the State’s custody until March 12, 1964, when he was delivered to federal authorities who held him until January 6, 1965.

While Moriarty was thus in custody, a chance event occurred which ultimately led to this litigation. On July 3, 1962 some workmen, renovating private garages at 127-131 Oxford Avenue, Jersey City, discovered $2,438,110 in currency and sundry papers in an old automobile. Those papers revealed Moriartjr’s operation of a gambling enterprise over an extended period. 1

This discovery precipitated activity at federal and local levels. On July 5 the District Director of Internal Revenue made a jeopardy assessment against Moriarty for income taxes and interest in the sum of $3,422,792.66. It is agreed that the federal lien became effective on that date. On the following day the local police discovered and seized the moneys involved in the action before us, under the following circumstances.

Since the papers found on July 3 related to a period which had ended sometime before the date of Moriarty’s imprisonment, the police began a search for records of Moriarty’s intervening operations and related cash. Moriarty having *35 selected a private garage for the cache discovered on July 3, the police thought it likely that he used still another garage to house the records and the product of that further gambling activity. This assumption proved correct, for, peering into a private garage at 56 Oxford Avenue, stipulated by the parties to be “in close proximity to the garage in which the $2,438,110 had been found on July 3, 1962,” the officers saw the familiar paraphernalia of a lottery operation. Later on the same day, armed with a search warrant obtained upon that showing, they entered the garage and seized the moneys here involved, together with sundry papers revealing gambling operations from December 14, 1961 to February 19, 1962, the day before Moriarty was taken into custody. This discovery led to a further indictment of Moriarty, and later he pled guilty to possession of lottery slips for the period of December 14, 1961 to July 6, 1962, the date when the police seized the monej^s here involved.

There is no dispute that the moneys were used in the gambling operation and were contraband on that account. Rather, the question is whether the tax lien attached to the monej's before title passed to the County. The United States contends the forfeiture could have occurred only when the moneys were seized by the police on July 6, which was one day after the date of the tax lien, while the County contends the forfeiture occurred at the moment the moneys were used for gambling, so that on the day of the tax assessment Moriarty had no property interest in the moneys to which the tax lien could attach. Upon this appeal the United States also urges, we think for the first time, that the Fourth Amendment bars the County’s claim because the moneys were obtained by an unlawful search and seizure. We will treat the two issues in that order.

I

The Federal statute provides for “a lien in favor of the United States upon all property and rights to property, *36 whether real or personal, belonging” to the delinquent taxpayer, 26 U. S. C. A. § 6321. Whether the taxpayer has. “property” or “rights to property” to which the tax lien may attach is controlled by State law. Aquilino v. United States, 363 U. S. 509, 512, 80 S. Ct. 1277, 4 L. Ed. 2d 1365, 1368 (1960). The pivotal question, then, is whether, under our State law, the moneys were the property of Moriarty on the effective date of the tax lien or had already been forfeited to the County upon their use in his gambling operation.

There were two types of forfeiture under the English practice at the time of the American Revolution. They are described by Mr. Justice Story in The Palmyra, 12 Wheat. (25 U. S.) 1, 14, 6 L. Ed. 531, 535 (1827), in these words:

“* * * 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 or conviction. It is plain from this statement that no right to the goods and chattels of the felon could bo acquired by the crown by the mere commission of the offense; but the right attached only by the conviction of the offender. The necessary result was, that in every case where the crown sought to recover such goods and chattels, it was indispensable to establish its right by producing the record of the judgment of conviction. In the contemplation of the common law, the offender’s right was not devested until the conviction. But this doctrine never was applied to seizures and forfeitures, created by statute, in rem, cognizable on the revenue side of the exchequer. The thing is here primarily considered as the offender, or rather the offense is attached primarily to the thing; and this, whether the offense be malum pro-hibitum, or malum in se. The same principle applies to proceedings in rem, on seizures in the admiralty.”

In Palmyra, the question was whether the statutory forfeiture of the offending article depended upon a conviction of the offending person. The Court held that it did not. The Court had no occasion to say when the forfeiture did occur, but other authorities laid down some precise rules.

With respect to the so-called “common law” forfeiture, i. e., the forfeiture which depended upon the owner’s conviction of treason or felony, the common law held that “The *37

Free access — add to your briefcase to read the full text and ask questions with AI

Farley v. $168,400.97, 259 A.2d 201, 55 N.J. 31, 1969 N.J. LEXIS 147, 24 A.F.T.R.2d (RIA) 5955 (N.J. 1969).

259 A.2d 201 (Farley v. $168,400.97) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Com. v. J. Irland Smith and Wesson 9MM Semi-Automatic Pistol, Serial PDW0493
153 A.3d 469 (Commonwealth Court of Pennsylvania, 2017)
Henry v. New Jersey Department of Human Services
9 A.3d 882 (Supreme Court of New Jersey, 2010)
Gac v. Gac
897 A.2d 1018 (Supreme Court of New Jersey, 2006)
State v. One 1990 Honda Accord
712 A.2d 1148 (Supreme Court of New Jersey, 1998)
State v. One 1990 Honda Accord
695 A.2d 303 (New Jersey Superior Court App Division, 1997)
STATE, DEP v. Larchmont Farms
628 A.2d 761 (New Jersey Superior Court App Division, 1993)
State v. American Banking Insurance
622 A.2d 261 (New Jersey Superior Court App Division, 1993)
State v. United States Currency
570 A.2d 1304 (New Jersey Superior Court App Division, 1990)
State v. Mollica
554 A.2d 1315 (Supreme Court of New Jersey, 1989)
State v. One 1986 Subaru
553 A.2d 869 (New Jersey Superior Court App Division, 1989)
State v. Cavassa
549 A.2d 458 (New Jersey Superior Court App Division, 1988)
State v. $199.167
547 A.2d 1177 (New Jersey Superior Court App Division, 1988)
State v. 1979 Pontiac Trans Am
487 A.2d 722 (Supreme Court of New Jersey, 1985)
Director of Fin., Pr. Geo's Co. v. Cole
465 A.2d 450 (Court of Appeals of Maryland, 1983)
State v. Jones
438 A.2d 581 (New Jersey Superior Court App Division, 1981)
State v. Rose
414 A.2d 600 (New Jersey Superior Court App Division, 1980)
State v. One (1) Ford Van Econoline
381 A.2d 387 (New Jersey Superior Court App Division, 1977)
State v. McCoy
367 A.2d 1176 (New Jersey Superior Court App Division, 1976)
New Jersey Bank v. Green
368 A.2d 431 (New Jersey Superior Court App Division, 1976)