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U.S. Supreme Court
DEPARTMENT OF REVENUE OF MONT. v. KURTH RANCH, 511 U.S. 767 (1994)

Footnotes:

  1. The Fifth Amendment provides that "No person shall . . . be subject for the same offence to be twice put in jeopardy of life or limb . . . ." U. S. Const., Amdt. 5. The Double Jeopardy Clause protects against a second prosecution for the same offense after acquittal, a second prosecution for the same offense after conviction, and multiple punishments for the same offense. See North Carolina v. Pearce, 395 U.S. 711, 717 (1969). Although its text mentions only harms to "life or limb," it is well settled that the Amendment covers imprisonment and monetary penalties. See, e. g. Ex parte Lange, 18 Wall. 163 (1874); United States v. Halper, 490 U.S. 435 (1989). In Benton v. Maryland, 395 U.S. 784, 794 (1969), we held that this guarantee "represents a fundamental ideal in our constitutional heritage, and that it should apply to the States through the Fourteenth Amendment." See, W. LaFave & J. Israel, Criminal Procedure 1058-1059 (2d ed. 1992); 2 D. Rudstein, C. Erlinder, & D. Thomas, Criminal Constitutional Law ¶ 11.01[3]b, pp. 11-59 to 11-60 (1993).
  2. Mont. Code Ann. §§ 15-25-101 through 15-25-123 (1987). See In re Kurth Ranch, 145 B. R., 61, 66 (Bkrtcy. Ct. Mont. 1990). We refer throughout this opinion to the 1987 edition of the Montana Code — the version in effect at the time of the Kurths' arrest. Some sections of the Dangerous Drug Tax Act have since been amended.
  3. The Act defines "dangerous drug" as that term is defined in the Montana Code provisions that criminalize the possession of such drugs, see Mont. Code Ann. §§ 15-25-103(2), 50-32-101(6), 45-9-102 (1987), and authorize their seizure, see § 44-12-103 (1987).
  4. According to the Act's preamble, the Montana Legislature recognizes that the use of dangerous drugs is not acceptable, but concludes that because the manufacturing and sale of such drugs has an economic impact on the State, "it is appropriate that some of the revenue generated by this tax be devoted to continuing investigative efforts directed toward the identification, arrest, and prosecution of individuals involved in conducting illegal continuing criminal enterprises that affect the distribution of dangerous drugs in Montana." 1987 Mont. Laws, ch. 563, p. 1416.
  5. Section 5(1) of the Act provides that "[a]ll law enforcement personnel and peace officers shall promptly report each person subject to the taxto the department, together with such other information which the department may require, in a manner and on a form prescribed by the department." Mont. Code Ann. § 15-25-113(1) (1987).
  6. The respondents are Richard Kurth; his wife, Judith Kurth; their son, Douglas Kurth; their daughter, Cindy Halley; Douglas's wife, Rhonda Kurth; and Cindy's husband, Clayton Halley.
  7. The Drug Tax Report listed the following seized items:
    1. 2155 marijuana plants in various stages of growth,
    2. 7 gallons of hash oil, (lined out),
    3. 4 bags of marijuana at two pounds each,
    4. 65/one gram vials of hash tar,
    5. 14 baby food size jars of hash tar,
    6. 7 pint jars of hash tar,
    7. 1 bag of marijuana, 1/4 pound,
    8. 5 plastic bags of marijuana, total 2230 grams,
    9. approximately 100 pounds of marijuana stems, leaves, parts, etc." 145 B. R., at 66-67.
  8. Plaintiff's Exhs. 3, 5, 7, 9, 11, 13; 145 B. R., at 64-65. Richard Kurth was also charged with criminal sale of dangerous drugs (marijuana), Mont. Code Ann. § 45-9-101 (1987), criminal possession of a dangerous drug (marijuana) with intent to sell, § 45-9-103, solicitation to commit the offense of criminal possession of a dangerous drug (marijuana) with intent to sell, § 45-4-101, and criminal possession of a dangerous drug (hashish), § 45-9-102. See Plaintiff's Exh. 3.
  9. Because only one respondent, Richard Kurth, was adjudged guilty of the offense of possession (the other five pleaded guilty to the conspiracy count), Montana has suggested that only he has standing to argue that the tax on possession constitutes a second punishment for the same offense. Respondents counter that Montana's withdrawal of the possession charges pursuant to the plea agreements would bar a second prosecution for possession. The issue was not raised below, so we do not address it.
  10. The precise figure appears to be $894,940.99. 145 B. R., at 68. The Court of Appeals' figure of "nearly $865,000," In re Kurth Ranch, 986 F. 2d 1308, 1310 (CA9 1993), apparently failed to take account of the $30,000 collected before computation of the final assessment. 145 B. R., at 68.
  11. Specifically, the Bankruptcy Court held that the assessments on the live marijuana plants and the marijuana oil were "arbitrary" and "lacked any basis in fact." 145 B. R., at 69.
  12. That portion is the tax imposed upon 100 pounds of "shake." "Shake" refers to the stems, leaves, and other loose parts of the marijuana plant that have less value because of their lower levels of tetrahydrocannabinol (THC), the chemical substance in marijuana that activates a user's senses. 145 B. R., at 66. Officials placed the market value for shake at $200 a pound. Thus when Montana taxed the shake at $100 per ounce, or $1,600 per pound, it taxed it at eight times its market value. Id., at 72.
  13. It is on this basis that the court distinguished this Court's cases holding a federal marijuana tax to be nonpunitive, see Minor v. United States, 396 U.S. 87 (1969); United States v. Sanchez, 340 U.S. 42 (1950), which did not involve previous criminal convictions. 986 F. 2d, at 1311. The court acknowledged that a State may legitimately tax criminal activities, id., at 1311 (citing Marchetti v. United States, 390 U.S. 39, 44 (1968)), and that a civil sanction need not satisfy a remedialanalysis when it is imposed apart from a criminal conviction. 986 F. 2d, at 1311 (citing Commonwealth Edison Co. v. Montana, 453 U.S. 609, 623 (1981)).
  14. We noted, however, that whether a sanction constitutes punishment is not determined from the defendant's perspective, as even remedial sanctions carry the "sting of punishment." 490 U. S., at 447, n. 7 (citing United States ex rel. Marcus v. Hess, 317 U.S. 537, 551 (1943)).
  15. Notably, in reaching that conclusion we relied in part on an earlier case recognizing that a tax statute might be considered punitive in character for double jeopardy purposes. See 490 U. S., at 443. That case, United States v. La Franca, 282 U.S. 568 (1931), observed that the words "tax" and "penalty" "are not interchangeable, one for the other" and that "if an exaction be clearly a penalty it cannot be converted into a tax by the simple expedient of calling it such." Id., at 572. See also Lipke v. Lederer, 259 U.S. 557, 561 (1922) ("The mere use of the word `tax' in an act primarily designed to define and suppress crime is not enough to show that within the true intendment of the term a tax was laid").
  16. In Helvering v. Mitchell, 303 U.S. 391 (1938), for example, this Court considered a Revenue Act provision requiring the taxpayer to pay an additional 50 percent of the total amount of any deficiency due to fraud with an intent to evade the tax. The Court assumed such a penalty could trigger double jeopardy protection if it were intended for punishment, but it nevertheless held that the statute was constitutional because the 50 percent addition to the tax was remedial, not punitive. Id., at 398-405. Although the penalty at issue in Mitchell is arguably better characterized as a sanction for fraud than a tax, the Court described it interchangeably as a "sanction," id., at 405, 406, an "addition to the tax," id., at 405, an "assessment," id., at 396, and a "tax," id., at 398, making nothing of the potential import of the distinction.
  17. The State recovered 1,811 ounces of marijuana with an estimated value of $46,000, and taxed the marijuana at $100 per ounce (that is, the greater of 10 percent of market value or $100 perounce), for a total tax of $181,000. The State thus taxed the drugs at about 400 percent of their market value. Compared to similar taxes on legal goods and activities, Montana's tax—assessed at a rate of 10 percent or roughly 400 percent of market value, whichever is greater—appears to be unrivaled. Even the taxes identified by the United States, which supports the DOR as amicus curiae, do not approach a level this high. See Brief for United States as Amicus Curiae 23-24. The United States notes hypothetically, for example, that the current 24-cent per pack federal tax on cigarettes could, under a new health plan, be increased to 99 cents, resulting in a total tax burden that "could easily surpass" the 80 percent rate that Montana imposed on the part of the marijuana consisting of the higher valued "buds." Ibid. The Government offers no such example, however, of a tax equivalent to that assessed on the combined cache of buds and lower valued "shake." See n. 12, supra.
  18. For example, although the Act's preamble evinces a clear motivation to raise revenue, it also indicates that the tax will provide for anticrime initiatives by "burdening" violators of the law instead of "law abiding taxpayers"; that use of dangerous drugs is not acceptable; and that the Act is not intended to "give credence" to any notion that manufacturing, selling, or using drugs is legal or proper. 1987 Mont. Laws, ch. 563, p. 1416.
  19. United States v. Constantine, 296 U.S. 287, 295 (1935) (concluding that a tax was motivated by penal instead of revenue raising intent in part because the taxpayer had to pay an additional sum based on his illegal conduct). See also United States v. La Franca, 282 U. S., at 571, 575 (holding that a liquor tax assessed only against those prosecuted for illegal manufacture or sale of liquor was barred on statutory grounds, thus avoiding the "grave constitutional question" whether double jeopardy principles precluded such an assessment).
  20. In Sanchez we examined a federal marijuana tax, IRC §2590" (a)(2) (since repealed, but last codified at 26 U.S.C. § 4741 et seq. (1964)), that taxed the transfer of marijuana to a person who has not paid a special tax and registered. Under the statute, the transferor's liability arose when the transferee failed to pay the tax; as a result, "[s]ince his tax liability does not in effect rest on criminal conduct, the tax can be properly called a civil rather than a criminal sanction." 340 U. S., at 45.
  21. This statute therefore does not raise the question whether an ostensibly civil proceeding that is designed to inflict punishment may bar a subsequent proceeding that is admittedly criminal in character. See Justice Scalia's dissent, post, at 7-8. Nor does the statute require us to comment on the permissibility of "multiple punishments" imposed in the same proceeding, cf. Ex parte Lange, 18 Wall. 163 (1874); North Carolina v. Pearce, 395 U.S. 711 (1969), since it involves separate sanctions imposed in successive proceedings.
  22. In this case, it is significant that the same sovereign that criminalized the activity also imposed the tax. Contrarily, most of our cases confirming that the unlawfulness of an activity does not prevent its taxation involve taxes on acts prohibited by other sovereigns. For example, United States v. Constantine, supra, involved a federal excise tax on retail liquor sales that violated state law. 296 U. S., at 293. Likewise, in James v. United States, 366 U.S. 213 (1961), a federal tax on embezzled money was imposed upon a man who had pleaded guilty in state court to conspiracy to embezzle. Id., at 214. And Marchetti v. United States, 390 U.S. 39 (1968), involved a federal tax on gambling activities primarily prohibited under state law, though as the Court there noted, some federal statutes also prohibited activities ancillary to wagering. Id., at 44-47. The importance of the distinction between same sovereign proceedings and dual sovereign proceedings also is borne out by our cases holding that the Constitution does not prohibit successive prosecutions by different sovereigns based on the same conduct. See, e. g., Bartkus v. Illinois, 359 U.S. 121 (1959) (state prosecution after federal); Abbate v. United States, 359 U.S. 187 (1959) (federal prosecution after state)
  23. Curiously, one of two alternative measures of the tax is the market value of a substance that cannot legally be marketed.
  24. Courts—including this Court in United States v. Sanchez, 340 U.S. 42 (1950)—have frequently commented on the punishing and deterrent nature of drug taxes. See, e. g., Sims v. State Tax Comm'n, 841 P. 2d 6, 13 (Utah 1992); Rehg v. Illinois Dept. of Revenue, 152 Ill. 2d 504, 515, 605 N. E. 2d 525, 531 (Ill. 1992); State v. Gallup, 500 N. W. 2d 437, 445 (Iowa 1993); State v. Roberts, 384 N. W. 2d 688, 691 (S. D. 1986); State v. Berberich, 284 Kan. 854, 811 P. 2d 1192, 1200 (Kan. 1991); State v. Durrant, 244 Kan. 522, 769 P. 2d 1174, 1181 (Kan. 1989), cert. denied sub nom. Dressel v. Kansas, 492 U.S. 923 (1989).