State ex rel. Corbin v. Valentine

Citations: 168 Ariz. 399; 814 P.2d 356; 90 Ariz. Adv. Rep. 13; 1991 Ariz. App. LEXIS 157Docket: No. 1 CA-CV 89-079

Court: Court of Appeals of Arizona; July 2, 1991; Arizona; State Appellate Court

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In March 1988, Arizona authorities seized a 1983 Toyota sedan owned by Willa Valentine for forfeiture, alleging that her daughter, Jeanne Scott Occhino, had committed racketeering violations by skimming cash from a nightclub and using the vehicle for this purpose. Mrs. Valentine received notice of the seizure on March 19, 1988, and subsequently filed a complaint asserting her exclusive ownership of the vehicle, which she claimed to have acquired before the alleged racketeering activities. The state countered with an in rem forfeiture claim. 

During the consolidated hearing, evidence revealed that Occhino purchased the vehicle in 1982 and transferred the title to Valentine in 1983. Although Valentine maintained insurance and used the car during winter visits, Occhino had claimed ownership on a credit application in 1985, and the state did not allege any involvement or knowledge of wrongdoing by Valentine. The trial court ruled in favor of the state, determining Occhino was the true owner based on her dominion over the vehicle and the lack of consideration for its transfer. 

Valentine appealed the forfeiture order. The legal framework permits the state to seek forfeiture of property used to facilitate crimes, requiring the state to initially prove probable cause for forfeiture, after which the burden shifts to the property owner to demonstrate their interest is not subject to forfeiture.

Evidence was presented by the state showing that Ms. Occhino, owner of the Rumper Room, under-reported the club's gross income on sales tax returns, violating A.R.S. 13-2310 and 13-2312, and concealed this income at her residence, violating A.R.S. 13-2317. The trial court determined that the vehicle used to transport the unreported income was subject to forfeiture under A.R.S. 13-2314(D)(6)(c) and found that Mrs. Valentine did not establish her ownership interest in the vehicle. The appeal revolves around whether the trial court erred in this finding. Mrs. Valentine claims to be an "innocent owner" under A.R.S. 13-4304(3), which protects owners who can demonstrate certain criteria, including acquisition of interest before the forfeiture act, lacking empowerment to convey the interest, and being unaware of the act leading to forfeiture. To assert this defense, she must show ownership or interest in the vehicle, defined under A.R.S. 13-4301(3). The state contends that mere titling of the vehicle in Mrs. Valentine’s name does not constitute proof of ownership, but a prima facie presumption of ownership does arise from a certificate of title, which can be rebutted. Evidence presented by the state indicated Ms. Occhino's use of the vehicle, but this did not overcome the presumption of ownership for Mrs. Valentine, who also maintained insurance and used the vehicle herself. Courts have generally held that "owner" in forfeiture exemption statutes refers to the registered title holder, as illustrated in relevant case law.

The trial court initially determined that the son owned the vehicle, having transferred the 'benefits of ownership' from the father, who was found to have relinquished custody, use, and control. However, the court of appeals reversed this decision, concluding that the father remained the owner based on uncontradicted evidence: he retained the vehicle's title, purchased insurance under his name, and paid for repairs. The court interpreted the term 'owner' under the innocent owner statute to mean the registered title holder. 

The trial court also erroneously found that Mrs. Valentine did not establish ownership due to a lack of consideration for the vehicle transfer. However, legal principles indicate that consideration is not required for a valid ownership transfer. Mrs. Valentine, holding the title, maintaining insurance, and using the vehicle in Arizona, was deemed the owner under A.R.S. 13-4301(3) and 13-4304(3). The court acknowledged that Ms. Occhino, who endorsed the title and intended the transfer, delivered both the vehicle and title, indicating that the transfer was valid and not a sham.

The document further discusses the nature of forfeiture laws in Arizona, distinguishing between in personam and in rem forfeitures. In personam actions allow the state to recover property from any individual, while in rem actions target specific property used in or facilitating an offense. Historical context reveals that forfeiture laws evolved from religious practices to serve as penalties for negligence and sources of revenue for the Crown. Modern statutes aim to reclaim property linked to criminal activity while emphasizing the importance of the owner's innocence. Exemptions from forfeiture should be interpreted liberally to prevent unjust imposition.

A.R.S. 13-4304(3) outlines an exemption from forfeiture for property owners who can prove three key elements. First, the owner must demonstrate acquisition of the interest before or during the conduct that led to forfeiture. In this case, Mrs. Valentine obtained title to the vehicle on July 10, 1983, while Ms. Occhino's alleged racketeering activities began in August 1987, thus establishing a four-year gap. Second, the owner must show that they did not empower any person involved in the forfeiture act to convey the interest. Mrs. Valentine testified that she never authorized Ms. Occhino to sell or transfer the vehicle, and no transfer occurred. Third, the owner must prove a lack of knowledge or reasonable awareness of the act leading to forfeiture. The state did not claim Mrs. Valentine was aware of any wrongful acts, even conceding that genuine ownership would exempt her interest from forfeiture. Consequently, the court found that Mrs. Valentine’s ownership interest was not subject to forfeiture and ordered the vehicle's return to her. Additionally, the court noted that Ms. Occhino faced felony charges but had not yet been tried, and highlighted the importance of connecting the owner to unlawful acts for forfeiture under A.R.S. 13-4311. The legal history of Arizona statutes reflects a concern for innocent owners, with current law aligned with this principle.