Smith v. State

232 N.E.3d 109

Angela Y. SMITH, Dylan Williams, and $11,180 in United States Currency, Appellants

v.STATE of Indiana, Appellee

Supreme Court Case No. 23S-MI-345

Supreme Court of Indiana.

Argued: February 19, 2024

Filed April 30, 2024

Appeal from the Marion Superior Court, No. 49D03-2009-MI-33278, The Honorable Gary L. Miller, Judge

ATTORNEY FOR APPELLANT SMITH: Stephen G. Gray, Indianapolis, Indiana

ATTORNEYS FOR APPELLEE: Theodore E. Rokita, Attorney General of Indiana, Justin F. Roebel, Supervising Deputy Attorney General, Indianapolis, Indiana

On Petition to Transfer from the Indiana Court of Appeals, No. 22A-MI-2910

Rush, Chief Justice.

Civil forfeiture laws have been around since before our country’s founding. But they are broader and far more widespread today, providing law enforcement with a "highly profitable" tool¹ that allows the State to seize property involved in criminal activity—particularly drug offenses. This tool has broad remedial characteristics, such as creating an economic disincentive to continue engaging in Illegal drug activity and permitting law enforcement to defray expenses incurred in the battle against drugs. But it also has significant criminal and punitive characteristics, such as permitting the seizure of property absent a criminal charge and punishing those whose property is confiscated. As a result, there is an inherent tension between the State’s use of civil forfeiture and citizens’ rights and interests. And so, to ensure a proper balance, civil forfeiture actions must strictly comply with the laws our Legislature has carefully crafted.²

Here, the State seized $11,180 found during a search of Dylan Williams’s apart- ment. The State then initiated forfeiture proceedings against the money. Williams did not answer the State’s complaint, but his aunt successfully moved to intervene and filed an answer asserting that she owned the money and that it was not tied to any criminal activity. Following a hearing, the trial court entered judgment for the State.

We reverse and remand. In reaching that decision, we clarify the procedural framework for when the State seeks forfeiture of money and who constitutes an "owner." We then apply that framework and hold that the State’s evidence fails to support the trial court’s forfeiture order. And we hold that the money must be returned to the aunt because she alone claimed ownership, she presented uncontradicted evidence establishing the $11,180 belongs to her, and the trial court neither concluded she was not the owner nor made any findings or statements questioning her credibility.

Facts and Procedural History

Dylan Williams was on parole in September 2020 when he was notified during a scheduled meeting that he had tested positive for illegal drugs. Because of the positive test, agents decided to search Williams’s apartment pursuant to his parole agreement. They brought Williams to the apartment, and he let them inside where they encountered his cousin who was visiting from Chicago. The agents recovered a digital scale from the cousin’s pocket and found what they believed to be crack cocaine in a closet. They then contacted a police detective to assist, and he applied for and was granted a search warrant for the apartment.

While executing the warrant, law enforcement recovered illegal drugs, packaging materials, and $11,180 in cash—$3,500 in various denominations from inside Williams’s wallet and $7,680 in various denominations secured by a rubber band from a dresser in his bedroom. As a result, the State charged Williams with Level 3 felony dealing in a Schedule I controlled substance, Level 6 felony possession of a narcotic drug, and Class A misdemeanor possession of a controlled substance. Williams ultimately pleaded guilty to the Level 6 felony possession charge, and the State dismissed the other two counts.

Meanwhile, the State sought forfeiture of the $11,180, alleging the money "had been furnished or was intended to be furnished in exchange for a violation of a criminal statute, or is traceable as proceeds of a violation of a criminal statute." Williams did not answer the complaint.³ But his aunt, Angela Smith, who lived in Milwaukee, Wisconsin, moved to intervene under Trial Rule 24(A)(2), asserting the money is her "exclusive property." The trial court granted that motion, and Smith filed a timely answer responding to the complaint. She stated that the money belonged to her and that it was neither "proceeds of a violation of a criminal statute, nor furnished or intended to be furnished for a violation of any criminal statute."

In December 2022, the court held a hearing at which the parties presented competing explanations for the $11,180. The State argued that "[t]he way the money was stored" and "the denominations that were found all indicate that there was criminal activity." In support, the State presented testimony from one witness, Detective Ryan Graber, who helped search the apartment. He testified that he "saw some cash … in a couple different locations" and that he "observed some narcotics in there as well." But he did not identify what "narcotics" were found, and he did not know where officers found "the particular narcotic drug" that led to Williams’s conviction.

Smith then testified, explaining that she withdrew $29,000 in June 2020 because her physically and emotionally abusive boyfriend regularly stole money from her and forced her to give him money. Later that month, about three months before the State’s seizure, Smith said she met Williams at his mother’s house where she gave him $15,000 in cash "to hold for" her so she could "hide the money" from her abuser. She kept the other $14,000 with her, "[u]nfortunately" carrying it in her purse every day. Smith corroborated her testimony with bank records, a police report, photographs of head injuries her boyfriend inflicted on her, and a protective order she obtained and renewed against him.

After the hearing, the trial court entered judgment for the State, concluding that "the currency in question is subject to forfeiture … and the State has met its burden of proof by a preponderance of the evidence that the currency should be seized." Smith appealed, and our Court of Appeals affirmed. Smith v. State, No. 22A-MI-2910, at *1, 2023 WL 4696810 (Ind. Ct. App. July 24, 2023) (mem.). We then granted Smith’s petition to transfer, vacating the Court of Appeals’ opinion. Ind. Appellate Rule 58(A).

Standard of Review

[1, 2] This appeal implicates two standards of review. We interpret the civil forfeiture statutes de novo. Abbott v. State, 183 N.E.3d 1074, 1080 (Ind. 2022). But in applying that interpretation, we consider only the evidence favorable to the trial court’s judgment and any reasonable inferences drawn therefrom without reweighing the evidence or assessing witness credibility. Lipscomb v. State, 857 N.E.2d 424, 427 (Ind. Ct. App. 2006).

Discussion and Decision

[3–6] Civil forfeiture is a legal fiction that authorizes "action against inanimate objects for participation in alleged criminal activity." Abbott, 183 N.E.3d at 1079 (quotation omitted). Participation is all that’s required; property can be seized and forfeited "regardless of whether the property owner is proven guilty of a crime—or even charged with a crime." Serrano v. State, 946 N.E.2d 1139, 1140 (Ind. 2011). In the context of illegal drug activity, forfeiture actions "are designed to be a relatively efficient means to remove, from its owner, property used to further illegal trafficking in drugs." Katner v. State, 655 N.E.2d 345, 347 (Ind. 1995). Yet, despite that laudable design, civil forfeitures "are not favored" due to their "significant criminal and punitive characteristics." Hughley v. State, 15 N.E.3d 1000, 1005 (Ind. 2014) (quotation omitted).

[7, 8] In these ways, actions under Indiana’s civil forfeiture statutes implicate unique characteristics—they can deter illegal activity, but they can also provide the State with financial incentives that encumber property owners. See State v. Timbs, 134 N.E.3d 12, 38 (Ind. 2019). Both our Legislature and our Court have recognized these competing characteristics in recent years. Indeed, the General Assembly has amended the forfeiture statutes in seventeen of the last twenty years. Those changes include expanding property that is subject to forfeiture, providing innocent owners with the ability to petition for the release of certain property during the pendency of an action, and reducing the State’s time to file a forfeiture complaint.

We have likewise been active in this area. For example, we have held that forfeiture actions may be subject to the Eighth Amendment’s Excessive Fines Clause, id. at 23, and that the light to a jury trial under Article 1, Section 20 of the Indiana Constitution attaches when the State seeks to confiscate money, State v. $2,435 in U.S. Currency, 220 N.E.3d 542, 544 (Ind. 2023). These decisions, among others, reflect our role to apply the law as written and enforce civil forfeitures "only when within both the letter and spirit of the law." Hughley, 15 N.E.3d at 1005 (quotation omitted).

[9] Turning to that law, the civil forfeiture statutes permit forfeiture in a contested action if the State shows by a preponderance of the evidence at a hearing that the seized property falls within one of several categories. Ind. Code § 34-24-1-4; see also id. § -1. The State generally makes that showing by establishing a "substantial connection," or "nexus," that the property "was used to commit one of the enumerated offenses under the statute." Serrano, 946 N.E.2d at 1140, 1143. As is relevant here, the statute provides two avenues for the State to seek forfeiture of money. I.C. § 34-24-1-1(a)(2), (d). One creates a rebuttable presumption that money is subject to forfeiture. Id. § -1(d). But the other does not, id. § -1(a)(2), imposing a heightened burden on the State at a healing. Here, the State proceeded only under this latter avenue, and thus the...