Opinion ID: 504381
Heading Depth: 1
Heading Rank: 3

Heading: The Alienation Theory

Text: 13 According to the government, [t]he right at issue here is the right of the United States Government to prevent the resale or retransfer of U.S. military weaponry from foreign nations to other, unacceptable foreign powers. The government claims that this right constitutes an interest in, and a right to exercise control over, property. The government's argument in favor of this alienation theory has three steps. First, the government says that McNally requires that we interpret property broadly. Next, it urges that property is defined by the common law, and, finally, it claims that the common law recognizes as a property right a non-possessor's interest in the alienation of an object. 14 Although we do not necessarily disagree that property is to be interpreted broadly, we note that the government's citation to McNally does not support the government's position. Citing Durland v. United States, 161 U.S. 306, 16 S.Ct. 508, 40 L.Ed. 709 (1896), the Court said that the phrase 'any scheme or artifice to defraud' is to be interpreted broadly insofar as property rights are concerned. This quotation means that once a property right is found, any attempt to take the right by trickery is punishable, but it implies nothing about when to find a property right. This interpretation is bolstered by McNally's discussion of Durland, which held that the mail-fraud statute reached schemes to take property not only by common-law false pretense but also by any other means that a defendant might develop. Thus, we think that the Supreme Court has not directed us to interpret property more broadly than usual. 15 We agree with the government's second contention that common-law definitions can help elucidate the meaning of property under McNally, although we caution that definitions created for one purpose cannot always be transported into another. It is also undeniable that under some circumstances a right to control the future alienation and use of a thing is a property right. As the government points out, law students in real property class have traditionally learned about the fee simple determinable, the fee simple subject to a condition subsequent, the possibility of reverter, and the power of termination, all of which are devices through which a nonpossessor controls land. Similarly, in Carpenter the Supreme Court held that the Wall Street Journal's interest in the exclusive pre-publication use of the contents of its columns was a property right. 108 S.Ct. at 321 (exclusivity is an important aspect of confidential business information and most private property for that matter.). 16 However, the fact that the common law recognizes some rights to control alienation as property does not mean that all such rights are property rights within the meaning of the federal fraud statutes. The analogy to the common law cuts both ways. In Carpenter, the court pointed out that the right in question there--exclusive use of confidential business information--was recognized in various contexts. 108 S.Ct. at 320. That the right at issue here has not been treated as a property right in other contexts, and that there are many basic differences between it and common-law property are relevant considerations in deciding whether the right is property under the federal fraud statutes. 17 One difference between the right asserted here and traditional real-property rights is that common-law real property estates usually provide that an estate holder will, under some circumstances, have the right to possess the land. 1 However, the United States will never have the right to possess the weapons involved in this case, even if a foreign government violates the resale restrictions. Instead, either the President or Congress may determine that a violation warrants restrictions on future sales of weapons to the violator. 22 U.S.C. Sec. 2753(c)(1)-(4). The government concedes that the violations have no effect on the purchaser's title or on the seller's right to profits from the illegal sale. This elaborate, integrated scheme substitutes for the traditional property remedies of replevin, damages or specific performance, a substitution that is further proof that the right is not property. Moreover, as this court has said in a different context: When Congress has provided specific and elaborate enforcement provisions, and entrusted their use to particular parties, we will not lightly assume an unexpressed intent to create additional ones, like federal fraud prosecutions here. Fox v. Reich & Tang, Inc., 692 F.2d 250, 255 (2d Cir.1982), aff'd sub nom. Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 104 S.Ct. 831, 78 L.Ed.2d 645 (1984). See also Dowling v. United States, 473 U.S. 207, 226, 105 S.Ct. 3127, 3138, 87 L.Ed.2d 152 (1985) (Congress should not be presumed to have adopted an indirect blunderbuss solution to a problem treated with precision when considered directly.). We are particularly loath to expand the wire and mail fraud statutes further, since we have already tolerated an extraordinary expansion of these laws. United States v. Weiss, 752 F.2d 777, 791 (2d Cir.) (Newman, J., dissenting), cert. denied, 474 U.S. 944, 106 S.Ct. 308, 88 L.Ed.2d 285 (1985). 18 The government responds that the nature of the remedy does not affect the characterization of the interest. It explains that the remedy is unusual because the offending party is often a foreign sovereign, and no judicial forum exists to enforce rights against foreign sovereigns. The government argues that [t]he realities of international law and politics ... which prevent the United States from filing a replevin or damages action ... whenever a foreign country breaches its agreement not to resell arms ... hardly leads [sic] to the conclusion that the United States has no rights.... It simply explains why Congress enacted the retaliatory remedies. We do not disagree with the government's characterization of the problems Congress faced, and we do not enter the longstanding debate about the relationship between rights and remedies. However, the difficulty Congress faced highlights that the interest here is of a different character than run-of-the-mill property rights. 19 There are other important dissimilarities between the basic assumptions made by the common law of property and those made in the world of international arms sales. Property law disfavors restraints on alienation and dead-hand control by prior owners. In contrast, Congress has enacted elaborate laws to limit who may possess or sell weapons. Moreover, the usual rules of economics are not supposed to govern arms sales, which instead are regulated by foreign and human-rights policies in addition to supply and demand. Because the background for the rules governing arms sales differs so greatly from the background of common-law property, we are reluctant to engraft principles from one sphere to the other. 20 All of these distinctions suggest to us that the government's interest here is ancillary to a regulation, not to property. A law prohibiting a particular use of a commodity that the government does not use or possess ordinarily does not create a property right. If it did, many government regulations would create property rights. For example, laws preventing the sale of heroin or the dumping of toxic waste would create government property rights in the drugs or chemicals. Admittedly, the line between regulation and property is difficult to draw with scientific precision, see generally B. Ackerman, Private Property and the Constitution (1977), and we do not mean to imply that the government never has a property interest in the limits it imposes on property use. 21 In this criminal case, however, our evaluation of the differences between weapons and more usual property is colored by the rule of lenity, which the Supreme Court recently directed we consider when interpreting the statutes at issue here. In McNally, the Court explained that when there are two rational readings of a criminal statute, one harsher than the other, we are to choose the harsher one only when Congress has spoken in clear and definite language.... 'There are no constructive offenses; and before one can be punished, it must be shown that his case is plainly within the statute.'  107 S.Ct. at 2881 (citations omitted). Although the alienation theory is clever and appeals to a lawyer's sense of technical symmetry, absent more specific language in the statute it is not a solid enough theory on which to ground a criminal prosecution involving a highly-regulated and unusual field. 22 Because of the substantial differences between international arms sales and common-law property transactions, we conclude that the United States's interest in regulating foreign resales of arms is not a property right for wire and mail fraud purposes. In so doing, we do not fear that wrongdoing will go unpunished because the government can prosecute defendants under other existing laws, and indeed is doing so. In addition, if Congress feels that still more laws are necessary, it can enact them. 23 The judgment of the district court is affirmed.