ATTORNEY FOR APPELLANT

Donald E. James

Fort Wayne, Indiana

ATTORNEYS FOR APPELLEES

Gregory F. Zoeller

Attorney General of Indiana

Kathy Bradley

Deputy Attorney General

Indianapolis, Indiana

In the

Indiana Supreme Court

_________________________________

No. 02S03-1104-CV-241

MARTIN SERRANO,

Appellant (Defendant below),

v.

STATE OF INDIANA, AND THE 

CITY OF FORT WAYNE,

Appellees (Plaintiffs below).

_________________________________

Appeal from the Allen Superior Court, No. 02D01-0808-PL-422

The Honorable David J. Avery, Judge

_________________________________

On Petition to Transfer from the Indiana Court of Appeals, No. 02A03-0908-CV-362

_________________________________

April 27, 2011

Shepard, Chief Justice.

Civil forfeiture is a device, a legal fiction, authorizing legal action against inanimate 

objects for participation in alleged criminal activity, regardless of whether the property owner is 

proven guilty of a crime—or even charged with a crime. Appellant Martin Serrano lost his truck 

in a forfeiture action based on the presence of cocaine residue found in the carpet of the vehicle 

and on a box of $500 in quarters. The Court of Appeals was correct to reverse the forfeiture 
2

because the State failed to prove any substantial connection, any nexus, that the truck bore to 

commission of a crime. 

Facts and Procedural History

Martin Serrano was the purchasing manager at the El Paraiso grocery store in Fort 

Wayne. The Fort Wayne Police Department had placed the store under surveillance after 

receiving an anonymous tip that the store was receiving shipments of drugs from Chicago. 

(Appellant‘s App. at 100, 102, 133, 136–37.) On July 10, 2008, officers observed Serrano‘s 

2004 GMC silver pickup ―meeting‖ with a box truck in front of the grocery store. (Tr. at 77.) 

Officers observed both vehicles depart in opposite directions and meet again behind the store,

with the box truck eventually backing up to the loading dock. They did not witness anything 

being loaded or unloaded from either vehicle. 

The police followed the box truck as it left the grocery store and conducted a traffic stop. 

During this stop, the pickup truck driven by Serrano ―went by and started speeding off,‖ 

eventually ―weaving in-and-out of traffic.‖ (Tr. at 79–80.) Officers had run the license plate on 

Serrano‘s pickup and determined that the registered owner had an outstanding warrant. (Tr. at 

79.) Uniformed officers eventually caught up to Serrano and pulled him over for speeding. 

After the officers took Serrano into custody on the outstanding warrant, a canine officer 

conducted a sniff test of Serrano‘s truck. (Tr. at 18–19, 80, 122.) The canine alerted, indicating 

the presence of narcotics. (Tr. at 44–45, 52.) The police towed Serrano‘s vehicle to a department 

facility. Meanwhile, Serrano was released after it was confirmed, via fingerprints, that the 

warrant was for a different Martin Serrano. (Tr. at 7–8.) 

The next day, officers obtained a search warrant and searched Serrano‘s truck, which was 

still in police possession. They found a box of about $500 in quarters and $51 in cash. (Tr. at 80, 

82, 98–99.) The box of quarters was covered in a residue later determined to be cocaine. (Tr. at 

83.) There was similar residue in the front carpet and the back carpet of the truck. (Tr. at 83–85.) 
3

When questioned concerning the drug residue about a month later Serrano admitted that he 

sometimes ―makes‖ drugs, which he later clarified to mean that he uses drugs. He also said he 

was the only person who drives the truck (Tr. at 87–90.) 

On August 20, 2008, the State filed a complaint for forfeiture, citing the cocaine residue. 

(Appellant‘s App. at 305–06.) The complaint sought forfeiture of Serrano‘s truck and the $551

recovered from the vehicle. On two occasions during September, investigators conducted ―trash 

runs‖ at Serrano‘s residence recovering various banking receipts (wire transfers, deposit receipts 

and money orders). (Tr. at 91; Plaintiff‘s Ex. 8, 11, 12, 13, 14.) 

After a bench trial, the trial court entered judgment in favor of the State for the truck and 

in favor of Serrano for the cash. (Appellant‘s App. at 13.) The court concluded that Serrano used 

his truck to transport or facilitate the transportation of a controlled substance for the purposes of 

committing a drug related offense, specifically, possession of cocaine or a narcotic drug in 

violation of Indiana Code § 35-48-4-6 (2008). (Appellant‘s App. at 12.) 

Serrano‘s appeal has challenged the sufficiency of the evidence, contending the State 

failed to prove that the presence of cocaine in his truck was anything more than incidental or 

fortuitous. A divided Court of Appeals agreed, and reversed, concluding the State failed to 

demonstrate a nexus between Serrano‘s possession of cocaine residue and the use of his truck. 

Serrano v. State, No. 02A3-0908-CV-362, (Ind. Ct. App. Jun 28, 2010). We grant transfer to 

confirm the rationale of the Court of Appeals in reversing the trial court. 

In Rem Forfeiture 

In rem forfeiture is an ancient concept under which courts obtained jurisdiction over 

property when it was virtually impossible to seek justice against property owners guilty of 

violating maritime law because they were overseas. Civil forfeiture traces to ancient Roman and 

medieval English law; both made objects used to violate the law subject to forfeiture to the 

sovereign. See United States v. 785 St. Nicholas Ave., 983 F.2d 396, 401–02 (2d Cir. 1993).
4

Civil forfeiture is no longer tethered to difficulties in obtaining personal jurisdiction over an 

individual. It now serves as ―one of the most potent weapons in the judicial armamentarium,‖ 

See United States v. 384–390 West Broadway, 964 F.2d 1244, 1248 (1st Cir. 1992) (discussing 

widespread use of in rem proceedings against drug offenders). Civil forfeiture is a leading

method for imposing economic sanctions against narcotics traffickers. 

Today, all states have statutory provisions for some form of asset forfeiture, and there are 

more than four hundred federal forfeiture statutes relating to various federal crimes. Marian R.

Williams, Jefferson E. Holcomb, Tomislav V. Kovandzic & Scott Bullock, Institute for Justice,

Policing for Profit: The Abuse of Civil Asset Forfeiture 11 (2010). An important feature of 

many of these statutes is characterization of the process as civil forfeiture under which (by 

contrast to criminal forfeiture) a property owner need not be found guilty of a crime—or even 

charged—to lose permanently their cash, car, home or other property. The relative ease of 

effecting such forfeiture and the disposition of the assets have become a matter of public note.1

Indiana’s Forfeiture Arrangements

Indiana‘s system for civil forfeitures proceeds under at least two constitutional provisions 

and a set of implementing statutes. 

The leading constitutional provision governing forfeiture is a product of the 

Constitutional Convention of 1850–51. Aside from dealing with the State‘s catastrophic debt 

problems arising from the Internal Improvements program and placing limits on the scourge of 

local and special legislation, the convention‘s leading achievement was an education article that 

mandated a ―general and uniform system of Common Schools, wherein tuition shall be without 

charge, and equally open to all.‖ Ind. Const. art. 8, § 1. At the core of the financing scheme for 

this objective was creation of the Common School Fund, a ―perpetual‖ depository for ―support of 

 

1 Heather Gillers, Mark Alesia & Tim Evans, Cashing in on Crime, Indianapolis Star, Nov. 14, 2010, at 

A1. 
5

Common Schools, and no other purpose.‖ Ind. Const. art. 8, § 3.2 Among the multiple financial 

sources committed to this fund are ―the fines assessed for breaches of the penal laws of the State; 

and from all forfeitures which may accrue.‖ Ind. Const. art. 8, § 2. In addition to these 

requirements, of course, the transfer of property from private hands to the government is subject 

to due course of law provisions. Ind. Const. art. 1, §§ 12, 21. 

The legislation that implements these constitutional directives is labeled Forfeiture of 

Property Used in Violation of Certain Criminal Statutes. It provides three grounds for the 

seizure of property. The State may seize property: (1) if the seizure is incident to lawful arrest, 

search or administrative inspection, or (2) if it is the ―subject of a prior judgment in favor of the 

state or unit in a proceeding under‖ the forfeiture statute, or (3) if a court issues an order for 

seizure after an ex parte determination of probable cause that the property is subject to seizure 

under the forfeiture statute. See Ind. Code. § 34-24-1-2 (2008). The Code directs that when a 

court enters judgment for the State it shall order the proceeds ―transferred to the treasurer of state 

for deposit in the common school fund.‖ Ind. Code § 34-24-1-4 (d)(2)(D) (2008).

3

The case before us rests on the first grounds for forfeiture. Law enforcement initially 

impounded Martin Serrano‘s vehicle while the police transported Serrano for fingerprinting to 

resolve questions surrounding an outstanding warrant in his name. After releasing Serrano, the 

officers continued to hold his vehicle while they sought a search warrant, which was granted and 

executed the next day. 

 Indiana‘s forfeiture statute announces a standard on which the State‘s petition for 

forfeiture may be granted. It states in relevant part: 

 

2

See Donald F. Carmony, The Indiana Constitutional Convention of 1850-1851, 157–60, (Bethany L. 

Natali & Elizabeth R. Osborn, eds. 2009), (Master‘s Thesis, Indiana University 1931) for a description of 

the extensive deliberations on design of the Common School Fund.

3

From the proceeds, the court may except law enforcement expenses incurred ―for the criminal 

investigation associated with the seizure‖ and a prosecutor‘s expenses associated with the forfeiture 

proceeding and the expenses related to the criminal prosecution. Ind. Code § 34-6-2-73 (2008). Whether 

this limited diversion, calculating actual expenses on a case-by-case basis, is consonant with the 

constitutional command that ―all forfeitures‖ be deposited in the Common School Fund is an unresolved 

question.
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(a) The following may be seized:

(1) All vehicles . . . if they are used or intended for use 

by the person . . . to transport, or in any manner to facilitate 

the transportation of the following:

(A) A controlled substance for the purpose of committing, 

attempting to commit, or conspiring to commit any of the 

following:

(vii) Possession of cocaine or a narcotic drug . . . .

Ind. Code § 34-24-1-1 (a)(1)(A)(vii) (emphasis added). To obtain the right to dispose of 

property, use the property, or recover law enforcement costs the State must demonstrate by a 

preponderance of the evidence that the property was subject to seizure. Ind. Code § 34-24-1-

4(a).

In Katner v. State, 655 N.E.2d 345 (Ind. 1995), this Court held that to sustain a forfeiture 

the State must demonstrate that the property sought in forfeiture was used to commit one of the 

enumerated offenses under the statute. This nexus, we said, best articulates the statute‘s 

requirement of proof by a preponderance that the property is subject to forfeiture. Id. at 349. 

Requiring such proof, Justice Selby wrote, is a ―means to guarantee that the government is 

seizing actual instrumentalities of illegal drug trade. . . . Depriving persons of their property such 

as vehicles unrelated to the drug trade will do little to advance our Legislature‘s intent.‖ Id. at 

349. Drawing a comparison to the Seventh Circuit‘s application of federal statutes, we held that 

our statute ―requires more than an incidental or fortuitous connection between the property and 

the underlying offense.‖ Id. at 348–49 (comparing our statute to the federal act discussed in 

United States v. 916 Douglas Avenue, 903 F.2d 490 (7th Cir. 1990)).4

Katner had been arrested following a traffic stop and violent altercation with police. 

Upon this arrest, officers discovered that Katner had a container in his pocket that contained 

cocaine residue. The State filed for forfeiture of his vehicle based on Katner‘s possession of less 

than .06 of one gram of cocaine. We adopted the Court of Appeals‘ decision in Katner. ―While 

 

4 Accord, Putnam Co. Sheriffs Dept. v. Smelley, No. 67C01-0902-MI-41 (Putnam Circuit Court, Bolk, J., 

Feb. 17, 2010) (alert by canine, plus cash found in van, held insufficient to sustain forfeiture).
7

the presence of the cocaine residue in the glass tube was sufficient to support Katner‘s 

possession conviction, his possession of the substance in his automobile did not constitute 

 ̳transportation‘ of cocaine for the purpose of possessing the drug.‖ Katner v. State, 640 N.E.2d 

388, 390 (Ind. Ct. App. 1994). Our own description of how the statute works under such 

circumstances was this: 

The State must show that the operator used (1) the vehicle to 

transport an illicit substance or item listed in the statute, (2) for the 

purpose of committing possession, attempting to commit 

possession, or conspiring to possess the substance or item. The 

second limitation, requiring the State to show transportation for a 

specific purpose, serves an important function, i.e. avoiding 

forfeiture where the operator of a vehicle coincidentally possesses 

drug residue, but is not transporting the residue, or using the 

vehicle in any other way to further possession or conspiracy to 

possess. 

Katner, 655 N.E.2d at 349 (emphasis added).

Serrano‘s truck was found to have cocaine residue in the front and back carpet and on the 

top of a box of quarters. (Tr. at 83.) The State also presented various wire transfer 

confirmations, deposit receipts and money orders (mainly gathered from the trash pulls), and 

copies of Serrano‘s tax returns, by which it sought to establish the inference that Serrano was 

living well beyond his means and thus must be involved in some sort of drug trade. The 

resulting inferences were insufficient to establish by a preponderance that Serrano‘s drug 

possession at the time he was arrested was furthered by the use of his vehicle or that Serrano‘s

vehicle was used for the purpose of possessing cocaine. 

Put another way, the State‘s evidence does not compel a conclusion that the presence of 

cocaine was anything more than ―incidental or fortuitous.‖ Katner, 655 N.E.2d at 348–49. The 

State presented no evidence or link to any drug transactions or trade other than the initial 

information from an anonymous informant that the grocery store was receiving large shipments 

of drugs. Serrano admitted he was a cocaine user, and without expounding, it seems apparent 
8

that there are numerous ways that cocaine residue may have made its way into the truck that do 

not involve the use of his vehicle in furthering the possession of cocaine. 

Conclusion

The judgment of the trial court is reversed. 

Dickson, Sullivan, Rucker, and David, JJ., concur.