Justices hear challenge to civil forfeiture disbursements

Under Article 8, Section 2 of the Indiana Constitution, “all forfeitures which may accrue” must be deposited into the Common School Fund for the benefit of Indiana’s public education system. Concurrent with this mandate, a longstanding practice among Indiana law enforcement has been to reimburse offices for the costs of completing a civil forfeiture with civil forfeiture proceeds, then depositing any remaining money into the CSF.

The problem with that reimbursement practice, a group of Indianapolis plaintiffs argue, is that it is in direct conflict with that constitutional mandate in Article 8, Section 2. But state prosecutors and law enforcement agencies disagree, claiming the constitutional language allows for some costs to be deducted from civil forfeiture proceeds before the proceeds are deposited into the fund.

These contrary readings of Article 8, Section 2 and its implication on Indiana’s civil forfeiture statute were at issue Thursday when the Indiana Supreme Court heard oral arguments in Jeana M. Horner, et al., v. Terry R. Curry, et al., 18S-PL-00333. The case, brought by the Virginia-based Institute for Justice, takes aim at the 2018 version of Senate Enrolled Act 99, codified beginning at Indiana Code section 34-24-1-3. Through that statute, civil forfeiture proceeds are distributed through a percentage-based formula that begins with attorneys’ fees and flows through law enforcement before depositing any remaining proceeds into the Common School Fund.

According to IJ attorney Sam Gedge, the percentage-based system will only leave about 10 percent of the proceeds from any civil forfeiture available to go into the CSF. That result, Gedge said, is the opposite of what the constitution intended, as “all forfeitures which may accrue” means all forfeitures, including civil forfeitures.

Marion Superior Judge Thomas Carroll rejected that argument in March, finding instead that the phrase “all forfeitures” as it was understood when the constitution was ratified in 1851, did not include civil forfeitures. The justices granted transfer to the case under Indiana Appellate Rule 56(A), bypassing the Indiana Court of Appeals.

The first issue Gedge had to contend with on appeal was that of standing. Indiana Solicitor General Thomas Fisher, arguing on behalf of the state, argued the plaintiffs lacked standing because caselaw requires the state to challenge practices that divert money from the CSF. That’s because the state acts as the trustee of the fund, Fisher said.

But Gedge maintained Marion County residents had standing to bring the case under the public standing doctrine. He said there is caselaw to support standing for taxpayers seeking to vindicate a public right, which is what he said is occurring in the instant case.

Moving to the merits, the premise of Gedge’s argument was simple: Article 8, Section 2 requires proceeds from all forfeitures, including civil forfeitures, to go entirely into the CSF without any room for costs. When asked by Chief Justice Loretta Rush what test should be developed to determine what costs can be deducted from forfeiture proceeds, Gedge struggled to provide an answer, insisting instead that the constitution requires 100 percent of the proceeds to be deposited.

But the defendants — including Marion County prosecutor Terry Curry, Indianapolis Mayor Joe Hogsett and Indianapolis Metropolitan Police Department Chief Bryan Roach, among others — claimed the provisions of Article 8, Section 2 are not self-enforcing, so it is up to the Legislature to enforce them. In the case of civil forfeitures, the Legislature chose to enforce the constitutional provisions through the disbursement mechanism laid out in the civil forfeiture statute.

In their briefing, the defendants pointed to the 1855 case of Auditor & Treasurer of Grant County v. Board of Commissioners of Grant county, 7 Ind. 315, 316, in which the court found that it was permissible for funds derived from the sale of seminaries to be used to pay a seminary’s debts before the proceeds of the sale were deposited into the Common School Fund. Like forfeitures, the proceeds of the sale of seminaries must be deposited into the fund under Article 8, Section 2.

Finally, Donald Morgan, the city of Indianapolis’ chief litigation counsel who argued alongside Fisher, said the constitution does not require forfeitures to be accrued to the state, but instead requires that any forfeitures that do accrue to the state be placed in the Common School Fund. In this case, the defendants are agents of their counties or municipalities, not the state, so their civil forfeiture proceeds are not subject to Article 8, Section 2’s provisions, Morgan said.

But Gedge closed by pointing to the 1889 case of Howard County v. State ex rel. Michener, 120 Ind. 282, 22 N.E. 255, which held that, “The money due the school fund cannot by any legislative contrivance be kept out of it.” In this case, Gedge said the civil forfeiture statute is a “legislative contrivance” designed to avoid the requirements in Article 8, Section 2, thus making it unconstitutional.

“‘All’ means ‘all,’’ Gedge said. “And ‘forfeitures’ means ‘forfeitures.’”

The complete oral argument, which was extended to give each party five extra minutes for their arguments, can be watched here.