Personal Property and Bailments Case 47. 1

No. 13439.

Missouri Court of Appeals,Southern District,Division One.

Sept. 10, 1984.

GREENE, Judge.

Gladys Piper, the widow of Andy Piper, died intestate in St. Clair County, Missouri, on November 15, 1982. Her heirs, consisting of nieces and nephews, all lived out of state. At the request of a majority of the heirs, Morran D. Harris, a local attorney, was appointed administrator of the estate of Gladys.

Personal property consisting of household goods, two old automobiles, farm machinery and ""miscellaneous,'' a total appraised value of $5,150, was inventoried in the estate. ""Miscellaneous'' did not include jewelry or cash. At the time of her death, Gladys Piper owned two diamond rings, known as the ""Andy Piper'' rings and $206.57 in cash. The rings and cash were in Gladys' purse when she died. Gladys' niece, Wanda Brown who lived in Reno, Nevada, took possession of the rings and the cash after the funeral, allegedly to preserve those items for the estate.

Clara E. Kauffman, a friend of Gladys Piper, filed a claim against the estate in the sum of $4,800, contending that from October of 1974 until the date of death of Gladys, Clara took Gladys to the doctor, beauty shop and grocery store, wrote her checks to pay her bills and assisted her in the care of her home by reason of the promise of Gladys to pay Clara in cash or diamond rings at her death ""all to reasonable value of $50 per month for eight years.'' The claim was heard by the trial court, after which the claim was denied for the reason that the services performed by Clara for Gladys were done as a volunteer. No appeal was taken from the denial of the claim. Clara Kauffman then filed a petition for delivery of personal property. Named defendants were the administrator of the estate as well as the nieces and nephews, including Wanda Brown, of Gladys Piper. The petition, authorized by section 473.240, RSMo 1978, as amended, alleged that the ""Andy Piper'' rings, of the appraised value of $2,500, were in the possession of Wanda Brown, having never been surrendered to the estate's administrator, and that the rings were the property of Clara, ""having been a consummated gift long prior to the death of Gladys Piper.'' Clara requested an order from the trial court directing Wanda Brown to deliver the rings to Clara and, if Wanda did not comply, that Clara have judgment ""against the defendants in the sum of $2,500.'' In his answer, the administrator requested the court to determine the rights of the estate and the parties to the property in question. In her answer, Wanda Brown admitted possession of the rings and cash, and that her custody of them had been necessary to preserve the assets until an administrator was appointed. Her answer included ""(f)or Estate inventory purposes,'' an appraisal of the rings by one Dan H. Maxey of Reno, Nevada, which showed their wholesale value as $875.

After hearing evidence, the trial court entered judgment directing Wanda Brown to deliver the rings and the cash to the administrator of the estate. The judgment further found that the value of the rings was $2,500, that they were the property of Clara Kauffman, and that Clara was entitled to possession of them. The judgment concluded by saying that if the rings were not delivered to Clara that she was entitled to a judgment of $2,500 against the estate. All defendants appealed from the judgment.

(1) We first observe that there is no evidence in this case that gives Wanda Brown the legal right to retain in her possession the ""Andy Piper'' rings, or the $206.57 cash which were in Gladys Piper's purse when she died. Those items should have been delivered to the administrator as soon as the estate was opened so that they could be inventoried and preserved as assets of the estate. We find no quarrel with those portions of the judgment ordering Wanda Brown to turn the rings and cash over to the administrator.

We direct our attention to that portion of the judgment declaring that the rings were the property of Clara Kauffman. Clara's petition claimed the rings belonged to her by reason of ""a consummated gift long prior to the death of Gladys Piper.'' The only evidence on the gift issue came from two witnesses. James Naylor, who had known Gladys for over 20 years, testified that when he saw Gladys ""(b)etween the time of her last admission to the hospital and the date of her death,'' Gladys told him, after Naylor had complimented her on her rings, that ""these are Clara's, but I am wearing them until I am finished with them, or until I am dead or whatever she may have said,'' and ""(b)ut she made the comment that these are Clara's but I am going to wear them until I am done with them.'' Beverly Marcus testified that Gladys told her ""when she was through with those rings, they were to be Clara's.''

(2, 3) There was no evidence of any actual delivery to Clara, at any time, of the rings. A person claiming an inter vivos gift of personal property has the burden of proving it by clear and convincing evidence. In re Estate of Wintermann, 492 S.W.2d 763, 767 (Mo.1973). The essentials of such a gift are 1) a present intention to make a gift on the part of the donor, 2) a delivery of the property by donor to donee, and 3) an acceptance by donee, whose ownership takes effect immediately and absolutely. Wantuck v. United Savings and Loan Association, 461 S.W.2d 692, 694 (Mo. banc 1971).

(4-7) While no particular form is necessary to effect a delivery, and while the delivery may be actual, constructive, or symbolical, there must be some evidence to support a delivery theory. What we have here, at best, through the testimony of James Naylor and Beverly Marcus, was an intention on the part of Gladys, at some future time, to make a gift of the rings to Clara. Such an intention, no matter how clearly expressed, which has not been carried into effect, confers no ownership rights in the property in the intended donee. Smith v. Smith, 313 S.W.2d 753, 756 (Mo.App.1958). Language written or spoken, expressing an intention to give, does not constitute a gift, unless the intention is executed by a complete and unconditional delivery of the subject matter, or delivery of a proper written instrument evidencing the gift. Ridenour v. Duncan, 246 S.W.2d 765, 769 (Mo.1952). There is no evidence in this case to prove delivery, and, for such reason, the trial court's judgment is erroneous.

The judgment of the trial court is reversed, and the cause is remanded to the trial court with directions to enter a new judgment consistent with this opinion.

D.Me.,2007.

No. CV-06-29-B-W.

Feb. 21, 2007.

WOODCOCK, District Judge.

On February 4, 2005, two railroad employees happened upon a black duffel bag in the bushes at the side of the tracks, opened it, and discovered $165,580.00 in cash. Having turned the money over to the United States Government, they would like it back, citing common law and the Maine statutory modification of the ancient rule “finders, keepers.” The United States has a different idea. It contends that under federal statute, the money must be forfeited to the United States Government, because the cash is traceable to the proceeds of drug trafficking and is evidence of the violation of federal currency laws.

I. Factual Background^FN1
FN1. This began as a motion to dismiss, but on February 16, 2007, at an oral argument, the parties agreed that the Court could consider as true the allegations in the Complaint and the statements in the Claimants' letters of claim; the Government also introduced the Claimants' answers to interrogatories. As such, the motion has become a motion for judgment on a stipulated record as against the claims of Mr. Madore and Mr. LaPointe. Boston Five Cents Sav. Bank v. Sec'y of Dep't of Hous. & Urban Dev., 768 F.2d 5, 11-12 (1 st Cir.1985); see also Bhd. of Locomotive Eng'rs v. Springfield Terminal Ry., 210 F.3d 18, 31 (1st Cir.2000). To avoid perplexing the case filing system, however, the Court is acting on the motion as a motion under its filing title-motion to dismiss.

In the deep of the Maine winter, the St. John River, which forms the border with Canada, freezes over as it flows through the town of Van Buren. Instead of a moat, the river is seasonally transformed into a pathway, suitable for travel by foot or snowmobile; for those who prefer to avoid United States Customs, particularly those engaged in illegal drug importation, the River becomes an opportunity for illegal entry into the United States. Typically, the smuggling consists of drugs being brought into the United States and cash heading for Canada.

Two days later, on February 4, 2005 at about 4:20 p.m., Senior Patrol Agents Robert W. Crawford and Stephen A. Brooker were patrolling the same area, when they saw a snowmobile driving up the same railroad tracks, where Agent Albert had made his observations. A Maine, Montreal, and Atlantic (MMA) train was slowly following the snowmobile. The tracks of the snowmobile later revealed that its driver had crossed the river and entered Canada illegally. About 4:45 p.m., two MMA employees-Daniel Madore and Traves LaPointe-came up to the Senior Patrol Agents and reported that they had recovered a black duffel bag in some bushes on the north side of the tracks and when they opened the bag, they found it contained a large amount of U.S. currency. Two agents took custody of the bag and the money.

About five minutes later, a snowmobile came along the railroad tracks and the Agents approached the driver. Agent Crawford had the black duffel bag strapped to his back in plain view. The driver identified himself as Allen Gagnon, a forty-three year old dual United States-Canadian citizen, living in Van Buren. The Agents and Mr. Gagnon conversed, and despite the obviousness of the black duffel bag, Mr. Gagnon made no mention of it. The Agents returned to the Border Patrol station and securely locked the bag and its contents in a safe. The next day, a drug-sniffing dog gave a positive alert on the bag for the scent of drugs.

Allen Gagnon decided to lay claim to the money. On February 7, 2005, he first called and then came to the USBP, saying that the bag contained his life savings. During his telephone conversation, Mr. Gagnon said that he had packed the money and knew exactly how much was in the duffel bag. When he came to the USBP station, Mr. Gagnon became agitated, said that he knew the agents had his money, and accused them of playing games. He stormed out of the Border Patrol station, slammed the door, and, got in the passenger side of a vehicle. He proclaimed to the driver that the Border Patrol would hear from his attorney and the driver, as he squealed his tires leaving the Boarder Patrol parking lot, gave the Patrol a one finger salute. Mr. Gagnon telephoned the Border Patrol later that day and again insisted the Patrol return his money.

On March 10, 2005, Mr. Gagnon wrote the USBP, enclosing a Petition for Relief, asserting that he is the sole and rightful owner of both the bag and the cash. In the Petition, he described exactly how much money was in the duffel bag, how it was wrapped, and how he came to lose it. On August 31, 2005, he returned to the USBP for an interview and explained that he possessed the cash because he did not want to leave it in his rented room and was *118 taking it for safe keeping to his sister's. He contended that during the winter, he always traveled around the Van Buren area with his life savings in a bag strapped to his snowmobile. The Government reviewed Mr. Gagnon's reported wages from 1999 to 2006 and the math did not begin to add up to an extra $165,000.00.

II. Procedural History

On March 1, 2006, the Government filed a civil forfeiture complaint against the $165,580, pursuant to 21 U.S.C. § 881(a)(6), 31 U.S.C. § 5317(c), and 31 U.S.C. § 5332(c).^FN2See Verified Compl. for Forfeiture (Docket # 1) (Compl.). Allen Gagnon, who was served with the Complaint (Docket # 7), never responded and was defaulted on June 14, 2006. See Order Granting Motion for Entry of Default (Docket # 18).

FN2.21 U.S.C. § 881(a)(6) provides a forfeiture for “all moneys ... furnished ... by any person in exchange for a controlled substance ....”; the Government alleges a violation of § 881(a)(6) in Count I. Compl. ¶¶ 17-19. 31 U.S.C. § 5317(c)(2) provides a civil forfeiture of “[a]ny property involved in a violation of section 5313, 5316, or 5324 of [title 31].” Section 5316 sets forth currency reporting requirements for transporting more than $10,000.00 out of the United States; the Government alleges violation of § 5316 in Count II of the Complaint. Id. ¶¶ 20-22. 31 U.S.C. § 5332(c)(2) imposes a civil forfeiture for the knowing concealment of cash in excess of $10,000.00 in currency with the intent to evade a currency reporting requirement; the United States alleges a violation of § 5332(c)(2) in Count III of the Complaint. Id. ¶¶ 23-25.

On April 7, 2006 and April 10, 2006, Daniel Madore and Traves LaPointe respectively wrote letters that described the circumstances under which they found the money and stated that they “would like to file a claim for this property.” ^FN3Notices of Claim (Docket # 4, 5). On June 8, 2006, each filed verified statements of interest, citing as authority 33 M.R.S.A § 1056 and the common law. See Verified Statement of Interest by Daniel Madore (Docket # 8); Verified Statement of Interest by Traves LaPointe (Docket # 9). Mr. Madore and Mr. LaPointe (Claimants) filed answers to the Complaint on June 30, 2006 (Docket # 20, 21), denying the essential allegations of the Complaint. During discovery, they attached to their answers to interrogatories copies of a letter dated August 18, 2006 from Attorney Erickson to Attorney Frank Bemis of Presque Isle, advising him that the town of Van Buren “may wish to file a claim in the United States District Court to reserve your interest.” Party in Interest Dan Madore and Party in Interest Traves LaPointe's Answers to Interrogatories, Ex. A (Gov't Ex. 1, 2).

FN3. The Madore letter begins “Dear Sir(s)” and the LaPointe letter is addressed “To Whom It May Concern;” neither contains the name or address of the addressee.

The Government moved to dismiss the verified statements for lack of subject matter jurisdiction; specifically, the Government asserts that the Claimants lack standing. See Motion to Dismiss Verified Statements of Interest (Docket # 25) (Govt.'s Mot.).

[1][2] “Standing is a threshold consideration in all cases, including civil forfeiture cases.” United States v. One-Sixth Share of James J. Bulger in All Present & Future Proceeds of Mass Millions Lottery Ticket No. M246233, 326 F.3d 36, 40 (1st Cir.2003) (hereinafter Bulger );^FN4see also *119Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). As an in rem proceeding, a civil forfeiture action is unlike most other civil actions, because the defendant is the property subject to forfeiture. Bulger, 326 F.3d at 40;United States v. Land & Buildings, No. 05-cv-302-SM, 2006 WL 827809, at *2-3, 2006 U.S. Dist. LEXIS 21137, at *8 (D.N.H. March 29, 2006). It is the claimant, not the plaintiff, who must demonstrate standing. Bulger, 326 F.3d at 40.

FN4. Although helpful, Bulger was based on the law before the enactment of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), Pub.L. No. 106-185, 114 Stat. 202.
[3][4][5] To contest the forfeiture, claimants must “first demonstrate an ownership or possessory interest in the seized property.” Id. at 41. Nevertheless, the First Circuit has cautioned that courts should not “conflate the constitutional standing inquiry with the merits determination that comes later” and has noted that the requirements to demonstrate constitutional standing are “very forgiving.” Id. The claimants need only show they have a “colorable” ownership interest in the property. Id.;United States v. One Lincoln Navigator 1998, 328 F.3d 1011, 1013 (8th Cir.2003). Courts have held that “an allegation of ownership and some evidence of ownership are together sufficient to establish standing to contest a civil forfeiture.” United States v. United States Currency, $81,000.00, 189 F.3d 28, 35 (1st Cir.1999); see also United States v. $38,570 U.S. Currency, 950 F.2d 1108, 1113 (5th Cir.1992). To evaluate a claim to property, the Court engages in a two-step process. State law “determines his ownership interest ..., but federal law determines the effect of his ownership interest on his right to bring a claim.” United States Currency, $81,000.00, 189 F.3d at 33;One Lincoln Navigator 1998, 328 F.3d at 1013.

1. The Claimants' Property Interest Under Maine Law

Maine law provides a statutory procedure for a person who finds lost property-money or goods-to claim an interest in the property. 33 M.R.S.A. § 1051 specifies:

Whoever finds lost money or goods of the value of $3 or more shall, if the owner is unknown, within 7 days give notice thereof in writing to the clerk of the town where the money or goods are found and post a notification thereof in some public place in said town. If the value is $10 or more, the finder, in addition to the notice to the town clerk and the notification to be posted, shall, within one month after finding, publish a notice thereof in some newspaper published in the town, if any, otherwise in some newspaper published in the county.

33 M.R.S.A. § 1051. In their verified statements of interest, the Claimants cite 33 M.R.S.A. § 1056 as authority for their claim to the currency. That statute provides:If no owner appears within 6 months, such money or lost goods shall belong to the finder by paying 1/2 their value after deducting all necessary charges to the treasurer of said town; but if he neglects to pay it on demand, it may be recovered in an action brought by said treasurer in the name of the town.

Id. The Claimants assert that this statute entitles them to “one half the property plus expenses, and provides that the town receive the remainder.” Claimants' Obj. to Govt.'s Mot. to Dismiss Verified Statements of Interest at 2 (Docket # 26) (Claimants' Obj.). The statute goes on to provide:If the finder of lost money ... neglects to give notice to the town clerk and to cause them to be advertised as provided, he forfeits to the owner the full value thereof unless he delivers or accounts therefor to the owner, in which case he *120 shall forfeit not more than $20, 1/2 to the town and 1/2 to the prosecutor.

33 M.R.S.A. § 1058.

There is a factual dispute as to whether the Claimants complied with the Maine statute. The Government contends that the Claimants did not, because they failed to “provide notice to the clerk of Van Buren, post notice or advertise their find within the time periods required by 33 M.R.S.A § 1051.” Govt.'s Reply to Claimants' Response to the Govt.'s Mot. to Dismiss at 2 (Docket # 27) (Govt.'s Reply ). The Claimants maintain that they “have notified the town of Van Buren, Maine of their discovery of the money pursuant to 33 M.R.S.A. § 1051” and that “[o]n June 8, 2006, [they] filed verified statements of interest laying claim to the defendant-in-rem as finders, within the meaning of 33 M.R.S.A. § 1051 et seq.” Claimants' Obj. at 2.

[6] The evidence does not support the Claimants' contention. Maine law requires that “[w]hoever finds lost money of the value of $3 or more shall, if the owner is unknown, within 7 days give notice thereof in writing to the clerk of the town where the money ... [is] found and post a notification thereof in some public place in said town.” 33 M.R.S.A. § 1051 (emphasis supplied). Further, if the value of the property is more than $10 the “finder, in addition to the notice to the town clerk and the notification to be posted, shall, within one month after find, publish a notice thereof in some newspaper published in the town, if any, otherwise in some newspaper published in the county.” Id. (emphasis supplied). First, the Claimants failed to comply with both the seven-day and the one-month requirements. They found the money on February 4, 2005, and there is no evidence they filed a notice with the town clerk of Van Buren by February 12, 2005, or that they published a notice within a month with a local newspaper.^FN5 Second, none of the Claimants' documents confirms that notice was sent to the Van Buren town clerk as required by the statute. Third, none of the Claimants' documents confirms that they posted the notice in Van Buren. Finally, none of the Claimants' documents establishes that they published a notice in the local newspaper. To the extent the statute requires compliance with its provisions to assert a claim for found property, the Claimants have failed to establish compliance.

FN5. There are three documents that could purport to comply with these notice requirements: (1) the letters dated April 7, 2006 and April 10, 2006; (2) the Verified Statements of Claim dated June 8, 2006; and, (3) the letter to Attorney Bemis dated August 18, 2006. None complies with the statutory periods.

The consequences of their failure are unclear. If notice is given and the true owner appears, the finder has no right to the property; instead, the owner “shall have ... the value of the money or goods, paying all necessary charges and reasonable compensation to the finder for keeping....”33 M.R.S.A. § 1054. If no notice is given and the true owner appears, the finder “forfeits to the owner the full value thereof, unless he delivers and accounts thereof to the owner....” ^FN633 M.R.S.A. § 1058. The overriding point is that the statute provides a mechanism for notifying the true owner of lost property and once *121 that owner appears and lays claim to the property, the finder-notice or not-does not have an ownership interest superior to the true owner. This point is clarified in the language of § 1051. It becomes applicable only when the owner is “unknown.” 33 M.R.S.A. §§ 1051, 1052.

FN6. The statute goes on to provide that if he “delivers and accounts therefor to the owner,” he “shall forfeit not more than $20, 1/2 to the town and 1/2 to the prosecutor.” 33 M.R.S.A. § 1058. This section is entitled, “failure to give notice; penalty,” and it appears to require the finder not only to return the money, but it imposes an additional penalty upon the finder who fails or refuses to comply with the notice provisions of the law.

Here, there are two possible “true” owners: Allen Gagnon and the United States. It is a logical inference from the Complaint that the owner of the $165,580.00 is Allen Gagnon. It would be passing strange for someone with no connection to the money in the duffel bag not only to know the exact amount of money in the bag, but also how it was wrapped and where it was lost. Mr. Gagnon's decision not to file a claim in the unusual circumstances of this case does not mean that he is not the owner; it only means that-likely for good and sufficient reason-he has decided not to claim the cash.

[7][8] Even so, Maine law does not give the Claimants a right to the money. Federal statutory law grants the United States Government an ownership interest in the cash, since it is money “furnished or intended to be furnished by any person in exchange for a controlled substance” or “proceeds traceable to such an exchange....”21 U.S.C. § 881(a)(6). The law provides that such illicit cash is forfeited to the Government and the Complaint clarifies that the money in this case is the other side of an illegal drug deal and as such, is illicit. If, for example, a cache of cocaine were found before the exchange for $165,580, it would take a person of unusual chutzpa and foolishness to claim entitlement to the cocaine under Maine statutory law. The Claimants can no more claim ownership in the proceeds of an illegal drug deal than they could claim rightful ownership in illegal drugs themselves or in the proceeds of an illegal gambling operation or house of prostitution. Simply because they found the money on the side of the railroad tracks does not legitimize the cash or their claim to it. Here, the Government seized the money because of its suspected involvement in the drug trade and, as such, it is statutorily subject to forfeiture.^FN7

FN7. At oral argument, the Claimants agreed that they have no evidence to refute the Government's contention that the cash was illicit. If they had a factual basis for contesting the gravamen of the Government's Complaint, this would be a different case. Under the standard analysis, therefore, the Government established probable cause that the property was used to facilitate a violation of federal criminal law. Once this burden is met, the burden shifts to the claimant to establish a defense to the forfeiture. United States v. One 1974 Porsche 911-S Vehicle Identification No. 9114102550, 682 F.2d 283, 285 (1st Cir.1982). To establish probable cause, the Government must “only show a reasonable ground for belief of the property's guilt, supported by less than prima facie proof but more than mere suspicion.” United States v. One Parcel of Real Property, 921 F.2d 370, 373 n. 6 (1st Cir.1990) (citing United States v. $250,000 in United States Currency, 808 F.2d 895, 897 (1st Cir.1987)) (internal punctuation omitted).

In short, the Claimants have not demonstrated compliance with the notice provisions of 33 M.R.S.A. §§ 1051 et seq. and, even if they had, Maine law would not grant them an interest in the cash superior to the true owner, whether Mr. Gagnon or the United States Government.

[9][10] To establish standing to bring their forfeiture challenge, the Claimants must show more than “unexplained naked possession of cash.” United States v. $1,189,466.00 in U.S. Currency, No. Civ. A. 1:06-CV-330GE, 2006 WL 2228939, at *2 (N.D.Ga. Aug.2, 2006). Because the Claimants have failed to do so, this Court *122 concludes they lack constitutional standing to assert their statements of interest.

Two cases put this conclusion into perspective. In United States v. $1,189,466.00 in U.S. Currency, No. 1:06-CV-330GE, 2006 WL 2228939 (N.D.Ga. Aug.2, 2006), a cab driver carrying one passenger was stopped by police for a traffic infraction. Id. at *1. After a consented-to search of the trunk, police found a suitcase that had been placed there by the passenger of the taxi. Id. When drug-sniffing dogs detected narcotics, the police opened the suitcase and found bundles of money wrapped in cellophane. Id. The cab driver filed a claim, asserting ownership of the property because it was found in his taxi and there were no other claimants. Id. at *2. The court found that the claimant lacked standing because the property was never lost, he was never in possession of the property, and had no fiduciary duty to the true owner. Id.

In One Lincoln Navigator 1998, the government pursued forfeiture of an automobile upon belief that it was used by an individual suspected of distributing crack cocaine. 328 F.3d at 1012. The suspect's mother and grandmother each filed claims of ownership pursuant to 18 U.S.C. § 983. Id. Title to the vehicle was in the mother's name, and the vehicle was actually purchased by the grandmother. Id. Applying Arkansas law, the court concluded that both claimants had constitutional standing: the law states that the holder of title of a vehicle is the owner, and the purchaser of the vehicle had the greatest financial stake. Id. at 1013. The court pointed out, in contrast, that “mere possession of the Navigator ... does not establish an ownership interest.” Id. at 1014-15.

The case here is more like $1,189,466.00 in U.S. Currency, and less like One Lincoln Navigator 1998. In One Lincoln Navigator 1998, the two claimants had clear ownership interests in the property seized-one actually purchased the vehicle and the other held legal title. Like the cab driver in $1,189,466.00 in U.S. Currency, here the Claimants merely came upon the money as the result of a fortuitous incident. While they might have briefly possessed the currency, mere naked possession does not rise to the level of an ownership interest. A comparison to these two cases supports that the Claimants lack constitutional standing.

B. Statutory Standing

[11] Article III standing aside, the Claimants must also demonstrate that they have statutory standing to contest the forfeiture action.^FN8Bulger, 326 F.3d at 40. Under federal law, monies that are the result of an unlawful undertaking are subject to forfeiture. See21 U.S.C. § 881; 31 U.S.C. § 5317; 31 U.S.C. § 5332. However, federal law provides for an innocent owner defense, stating: “An innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence.” 18 U.S.C. § 983(d). The statute logically defines “owner” as someone with an ownership interest, including “a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest....”18 U.S.C. § 983(d)(6)(A).

FN8. Although this question is sometimes included in the statutory analysis, it is actually “an element of the innocent owner's claim on the merits.” One Lincoln Navigator 1998, 328 F.3d at 1014.

[12] As it applies to the facts in this case, the federal statute anticipates this exact scenario, where innocent finders come upon property that has been used in *123 an illegal drug deal. The statute does not make their interests superior to the federal Government; instead, it expressly provides that an “owner” is not someone “with only a general unsecured interest, or claim against, the property or estate of another.” 18 U.S.C. § 983(d)(6)(B).

[13] Even if the Claimants could establish Article III standing, they have not demonstrated that they are innocent owners under 18 U.S.C. § 983(d)(6). First, their claim does not fall into any of the types of ownership interests enumerated in the statute. But, even if-as the Claimants assert-the list of cognizable ownership interests under § 983(d)(6)(A) is non-exhaustive, they still have shown no cognizable interest other than mere possession. The Maine statute does not create an ownership interest in the property; rather, it provides a statutory procedure to lay claim for property by giving notice of that claim against other possible owners. At best, even if successful under the Maine statute, the Claimants would have only a general unsecured interest or a claim against the money that they found alongside the railroad tracks and the federal statute is explicit that a “general unsecured interest” does not constitute ownership.

[14] The Claimants' reliance on common law to satisfy the § 983 definition of “owner” fares no better. It is true that under common law lost property “belongs to the first finder as against all persons but the loser.” Lawrence v. Buck, 62 Me. 275, 276 (1874). However, as the Maine Supreme Judicial Court explained in Weeks v. Hackett, 104 Me. 264, 268, 71 A. 858, 859-60 (1908), the “general rule is established by a substantially uniform line of decisions in the American States, with respect to both lost goods, properly so termed, and treasure-trove, that in the absence of legislation upon the subject, the title to such property belongs to the finder as against all the world except the true owner....”Id.(emphasis supplied).

Here, there is “legislation upon the subject.” Weeks observes that the “rule of the common law respecting the rights and duties of the finder of lost money or goods has been variously modified by the terms and provisions of local statutes of many States” and notes that “the provisions of the Maine Statutes (R.S., ch. 100, sect. 10, et seq.) have no reference to the law of treasure-trove.” Id., 71 A. at 860.Weeks distinguishes between treasure-trove, property found concealed in the earth or in a house or other private place, and property found lying on the ground. Id. at 267; 71 A. at 859.Weeks implies that the common law has been statutorily modified in Maine as regards property found on the earth by the predecessor the 33 M.R.S.A. §§ 1051 et seq., but not as regards treasure-trove.

[15] But more significantly, the specific federal forfeiture statute pre-empts general principles of common law concerning the legal rights of those who find property. See United States v. 817 N.E. 29th Drive, 175 F.3d 1304, 1311 n. 14 (11th Cir.1999). The Claimants lack statutory standing because they are not owners entitled to the innocent owner defense.

Because the Claimants have failed to meet their burden to demonstrate both constitutional and statutory standing, the Court GRANTS the Government's motion to dismiss the verified statements of interest filed by Daniel Madore and Traves LaPointe (Docket # 25).

SO ORDERED.

Case 47.3
474 F.3d 379

TREIBER & STRAUB, INC., d/b/a Treiber & Straub Jewelers, Plaintiff-Appellant/Cross-Appellee,

v.

UNITED PARCEL SERVICE, INC. and UPS Capital Insurance Agency, Inc., Defendants-Appellees/Cross-Appellants.

Nos. 05-3743, 05-3896.

Argued Feb. 17, 2006.

Decided Jan. 9, 2007.

, Circuit Judge.

Treiber & Straub, Inc. (“Treiber”), a fine-jewelry store in Wisconsin, needed to return a diamond ring to a California jewelry wholesaler. It turned to United Parcel Service, the world's largest package delivery company and, using the UPS website, it arranged to send the package via “Next Day Air.” As part of the transaction, it purchased $50,000 in insurance, the maximum permitted.

The ring was worth more than double that $50,000 limit-a fact that gave rise to Treiber's problems here after UPS lost the package. Treiber reimbursed the wholesaler for the full loss and then filed this lawsuit against UPS and UPS Capital Insurance Agency, Inc., a wholly owned subsidiary of UPS that administers UPS's excess value insurance program. (For simplicity, we refer in this opinion to both defendants as UPS.) Treiber wanted to collect the $50,000 for the lost package to which it believed it was entitled. UPS denied liability, pointing to the disclaimer found in its “Terms and Conditions,” its shipping tariff, and its insurance policy. These documents warn (repeatedly) that when customers ship items of “unusual value,” defined as those worth more than $50,000, there is no liability at all.

Finding federal jurisdiction proper because the case arose under the rules of federal common law that apply to lost or damaged goods shipped via air freight, the district court granted summary judgment for UPS. The court found that the company's disclaimers gave reasonable notice and were enforceable; it declined to reach Treiber's state law breach-of-contract theory, rejecting UPS's argument that it too arose under federal law because of field preemption. Both UPS and Treiber appealed. We affirm the district court's grant of summary judgment for UPS on the federal common law claim, and we modify the court's decision dismissing the state law claims without prejudice to a dismissal with prejudice.

Michael J. Straub, the president of Treiber, initiated the shipping of the diamond ring by UPS Next Day Air by going to UPS's website, www. ups. com. His plan was for the ring to be picked up in Wisconsin and delivered to Norman Silverman Co., the California jewelry wholesaler that owned it. The ring had a value of approximately $105,000. The Terms and Conditions of Service that UPS follows include the following restrictions on service:

(i) Any package with an actual value of more than $50,000 (U.S.);

...

UPS will not be liable or responsible for loss or damage to: articles of unusual value [as defined in item 460 of the UPS Tariff].

UPS picked up the ring on September 15, 2003, but the ring never arrived in California. On September 30, 2003, UPS acknowledged that the package was lost. Treiber submitted a claim for the $50,000 it thought was due to it under the policy, but on October 15, 2003, UPS disclaimed any liability because the ring's actual value exceeded $50,000 and thus it was an article of “unusual value.” Treiber paid Silverman the ring's actual value of $105,000 and then in January 2004 filed suit against UPS for $50,000.

In order to ship a package using UPS's website, a shipper must first agree to the items described under the heading “My UPS Terms and Conditions,” which include a separate document called the “Terms and Conditions of Service.” As is common in Internet commerce, one signifies agreement by clicking on a box on the screen. In addition, a first-time shipper must click a second time to agree to these same terms and conditions. (Regular shippers also receive annually a Rate and Service Guide containing, among other things, the Terms and Conditions of Service, but there is no indication in the record that Treiber was a regular shipper.) The Terms and Conditions of Service include the language we quoted earlier, which states that UPS will not ship articles of unusual value (i.e., those valued at more than $50,000), nor will it be liable for or responsible for loss or damage to such articles.

UPS's Tariff, the “exclusive agreement” between UPS and its shippers, is not short. It is available online at www. ups. com, and it offers a table of contents for easy reference. Item 460, titled “Definition of Articles of Unusual Value, Which Are Not Accepted by UPS for Transportation,” repeats that “[s]hippers are prohibited from shipping articles of unusual value via UPS,” and it defines the term “articles of unusual value” to include “[a]ny package having a value of more than $50,000.” Item 535, titled “Limitations of Liability,” also indicates that “UPS will not be liable or responsible for the loss of or damage to any package, the contents of which shippers are prohibited from shipping, which UPS is not authorized to accept, which UPS states that it will not accept, or which UPS has a right to refuse.” It too explicitly includes “articles of unusual value (as defined in Item 460)” as falling within that provision. Finally, Item 537 (if one gets that far) removes any remaining doubt about a shipment like Treiber's: it says that “UPS's maximum liability per package shipped domestically ... shall not exceed $100 regardless of the amount of Excess Value Insurance purchased by the shipper” and that “excess value insurance does not provide any insurance protection for packages or letters having an actual value of more than $50,000, even if a lesser amount is specified in the insured value field in the UPS shipping system used.” The same item continues, “The excess value insurance policy does not cover or excludes*383 coverage for: articles of unusual value (as defined in Item 460).”

Another document, the Excess Value Insurance policy, indicates (twice on the very first page) that it does not cover packages with actual values of more than $50,000. In a bullet point, the policy indicates that “Excess Value Insurance does not provide any protection for packages having an actual value in excess of $50,000 even if a lesser amount is specified in the insured value field” and then refers the reader to the exclusions section. Right below that, the policy contains a section called “What is Covered?” that provides almost word for word the same disclaimer. The warning appears a third time in the Exclusions section. The insurance policy, unlike the airbill generated by using the website or the Terms and Conditions and the Tariff, is not available online.

After the parties gave their consent to have a magistrate judge handle the proceedings, see , the district court ruled that Treiber “was provided plain and conspicuous notice of UPS's limitation of liability as it relates to articles of unusual value.” With adequate notice, the limitation was binding; the court therefore granted summary judgment for UPS. In addition, concluding that Treiber's breach of contract claim arose under state law and was thus within its supplemental jurisdiction, see , the court relinquished jurisdiction over that claim. Treiber appeals from the district court's judgment; UPS has cross-appealed, seeking outright dismissal of the breach of contract claim as one that also necessarily arose under federal law.

This case is somewhat unusual in that its alleged federal law basis comes from federal common law, something the parties themselves did not initially realize. Because Treiber is seeking only the $50,000 in insurance proceeds that it claims to have purchased validly, it appears that diversity jurisdiction is unavailable. See (amount in controversy must exceed $75,000). We therefore must first assure ourselves that federal question jurisdiction is secure. Normally, when one ships a package via UPS and there is a dispute, that dispute belongs in federal court because of the Carmack Amendment to the Interstate Commerce Act, . The Carmack Amendment, however, applies to ground carriers and not to air carriers. See ; (collecting cases). Thus, when Straub selected “Next Day Air” shipping, he also took this dispute outside the jurisdiction provided by the Carmack Amendment.

In some circumstances, a claim in federal court may arise under federal common law, which is a permissible basis for jurisdiction based on a federal question under . See . A federal common law contractual claim will support jurisdiction so long as it demonstrates on the face of the complaint a “sufficiently proximate federal interest.” . In this case, the federal interest is the same as the one that underlies the Carmack Amendment for ground carriers: a need for uniformity in interstate shipping and commerce. See (“[I]t is evident that Congress intended to *384 adopt a uniform rule and relieve such contracts from the diverse regulation to which they had been theretofore subject.”). Several of our sister circuits have already concluded that a suit against a common carrier that uses air rather than ground to transport goods arises under federal common law. See ; ; ; .

In the Fifth Circuit offered an extensive analysis of the history of federal common law liability of common carriers as well as the progression of regulation and deregulation of air carriers. It concluded that cases such as this one, for lost goods against common air carriers, arise under federal law. We are not aware of any circuit that has held otherwise. We therefore join our colleagues in holding that a claim for lost or damaged goods transported by a common air carrier arises under federal common law and thus falls within the district court's federal question jurisdiction. This conclusion also means, at a minimum, that the district court would have supplemental jurisdiction over Treiber's state law contractual claim assuming that it is part of the same constitutional case or controversy, as it appears to be. See . The more important question, as we see below, is whether there really is a separate state contract theory left once federal law has spoken to this matter.

On the merits, Treiber contends that the disclaimer of liability for packages of “unusual value” on UPS's website is not clear and conspicuous, a requirement that it believes federal common law imposes by analogy to the Carmack Amendment. This failure, Treiber reasons, resulted in its lack of notice or actual knowledge that there would be no insurance coverage (rather than coverage limited to $50,000) because the value of the package shipped exceeded $50,000. The “article of unusual value” provisions, it asserts, are “literally buried among all the other extensive terms and conditions on the vast UPS website.” We review the district court's grant of summary judgment de novo. See .

An initial question that the parties did not discuss is whether federal common law includes a specific requirement of “clear and conspicuous” notice in these circumstances; a generic requirement of “reasonable” notice would be more in keeping with a common law rule. We find it unnecessary to resolve that issue, as we explain below, but we note that a full analysis for the present case would need to take into account not only the analogy to the Carmack Amendment but also the McCarran-Ferguson Act, -, which addresses the regulation of insurance. Here, the district court (understandably) bypassed those preliminary questions and evaluated the UPS airbill in the terms the parties were discussing. It adopted a test from the Fifth Circuit's case, looking first to the “physical characteristics of the air bill” to determine “whether they provide reasonable notice to the shipper” and then to the “conditions under which the shipment was made.” See also (“A court first examines whether the contract documents provide *385 reasonable notice to the customer, and then considers whether the conditions under which the shipment was made offered the customer an opportunity to receive notice of the liability limitations.”). In as in this case, a jeweler shipped jewelry that was lost. The shipper used an air bill that had language on the back that excluded liability for the loss of jewelry. The air bill also incorporated by reference a “service guide,” which was readily available and repeated the disclaimer that the air carrier was not liable for the loss of jewelry. The Fifth Circuit decided that the prohibition of the shipment of jewelry in the air bill was sufficiently plain and conspicuous and that the shipper was experienced enough to make the limitation of liability enforceable.

Our examination of the relevant pages from UPS's website satisfies us that UPS provided adequate notice that customers were not permitted to ship items of “unusual value” (meaning worth more than $50,000) and that UPS would not be liable, nor would it offer insurance-even limited to $50,000-on the defined high-value items. Although this case differs slightly from in that UPS may not have provided one single document that explained everything about the limitation of liability, that distinction does not call for a different result in light of everything else that was available to the shipper. The fact that Straub had to agree not once, but twice, to abide by the Terms and Conditions set forth in order to ship the package, is enough to ensure that Treiber had clear and reasonable notice of the rules. The Terms and Conditions of Service repeat the disclaimer of liability several times and refer pointedly to the pertinent parts of the Tariff, which is also available on the UPS website.

UPS does not have the burden of proving that Treiber had actual knowledge of the pertinent restrictions. As the district court observed, “[f]ailure of the plaintiff to read the matter plainly placed before it cannot overcome the presumption that the plaintiff assented to the terms of the carrier.” This is basic contract law: one cannot accept a contract and then renege based on one's own failure to read it. See also (“While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract. It is standard contract doctrine that when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes an acceptance of the terms, which accordingly become binding on the offeree.”) (citing ). It would be different if, for example, Treiber arranged for the shipment in a face-to-face transaction and was never given a copy of or required to agree to abide by the Terms and Conditions of Service. See, e.g., . While Treiber may not be a regular user of the UPS website, the company is a business customer that knew about the high value of its package-indeed, it is reasonable to assume that most packages it shipped were relatively high in value. Straub should have taken the time to examine the provisions of the Tariff and/or the Terms and Conditions of Service before he sent an item worth more than $100,000 via UPS.

Treiber also contends that UPS's disclaimer of liability violates the federal “released value doctrine,” which grew out of the Supreme Court's decision *386 in . Under that doctrine, “if a carrier wishes to enforce a limited liability provision, its contract must offer the shipper (1) reasonable notice of limited liability, and (2) a fair opportunity to purchase higher liability.” We see no problem with UPS's practices in that respect. UPS initially limits its liability to $100, and then it offers its customers the opportunity to purchase higher liability/insurance up to $50,000. If a shipper wants to send a package with an actual value of more than $50,000, however, UPS will neither accept nor insure the package. This is a business decision that UPS is entitled to take. If it were to do what Treiber wants, and permit all packages with a value greater than $50,000 to be insured at the $50,000 level, it would distort the mix of claims it is insuring, skewing it toward the high-value end, necessitating a significant change in premiums. The risk of theft would also increase for packages with higher declared values.

UPS's policy is only marginally different from the one adopted by Federal Express that was discussed in . FedEx permits shippers to send packages worth up to $50,000, but it limits liability for items of extraordinary value to $500. The Ninth Circuit found that this policy did not violate the released value doctrine. Nothing in the released value doctrine suggests that a common carrier is obliged to accept every package. According to the Tariff, UPS also rejects, among other things, poorly wrapped packages, human body parts, animals, currency, and negotiable instruments. As a practical matter, if UPS did not refuse to insure such packages, shippers might do what Treiber did here, which was to conceal a violation of UPS's policy against accepting high-value items by indicating on the air bill the insured value (of $50,000 or less) rather than the actual value. In that way, Treiber effectively breached the shipping contract; UPS's refusal to accept liability for packages its customers ship deceptively in violation of rules set out in the Terms and Conditions of Service and the Tariff does not violate the “released value doctrine.”

C

After it dismissed Treiber's federal common law claim against UPS, the district court said that it was declining to exercise supplemental jurisdiction over the state law breach of contract theory. In so doing, it rejected UPS's argument that this part of the case was preempted by federal law. The court relied on , in which the Supreme Court held that the Airline Deregulation Act of 1978(ADA), , did not preempt regular breach of contract claims against airlines. While our case, of course, does not arise under statute but under the federal common law, the principle seems equally appropriate. There is no reason to assume that federal common law preempts an even wider swath of cases than the ADA, which overrides any state law that relates to rates, routes, or services. This is a broad standard that leaves to state law only breach of contract claims. See (“Nor is it plausible that Congress meant to channel into federal courts the business of resolving, pursuant to judicially fashioned federal common law, the range of contract claims relating to airline rates, routes, or services. The ADA contains no hint of such a role for the federal courts.”).

The problem is that this case is only nominally about a shipper seeking to enforce*387 a contract that it contends UPS breached. In reality, Treiber wants to use state law to avoid the part of the contract that limits the carrier's liability. Its claim is therefore not for the conventional breach of contract contemplated in Treiber cannot prevail unless we were to require “enlargement or enhancement [of the contract] based on state laws or policies external to the agreement.” See (“[W]e hold that the district court appropriately refused to allow King Jewelry to use California law to modify the liability provision.”). Because it would compel a certain kind of service, this would, in effect, be a rule “ ‘having the force and effect of law relating to rates, routes, or services of any air carrier....’ .” Rules of this type are explicitly preempted by the ADA and, we hold, are equally preempted by the analogous federal common law for air bills. The fact that one part of the contract deals with insurance does not alter our conclusion. UPS's insurance contract and its shipping contract are so intertwined that to permit state contract law to affect one is to allow it to affect the other. The shipping contract between a common carrier of packages by air and the shipper, while enforceable in state court, cannot be rewritten by state law. Since that is what Treiber seeks to do, we must find that the state law breach of contract theory in this case is preempted.

III

For these reasons, we Affirm the judgment of the district court in favor of UPS on the federal common law claim. We Modify the court's decision insofar as it dismisses the state law claim without prejudice. Because this theory is preempted by federal law, the judgment dismissing this claim must be changed to one with prejudice. UPS is entitled to recover its costs on appeal.