Opinion ID: 1196827
Heading Depth: 3
Heading Rank: 1

Heading: Forfeiture of the bond in lieu of the vessel, and failure to order an increase in the bond.

Text: The state in its cross-appeal argues that the superior court erred in allowing the owners of the American Eagle to forfeit the $350,000 bond they posted, rather than requiring the forfeiture of the vessel itself, or ordering an increase in the value of the bond to reflect a rise in the vessel's appraised value subsequent to the stipulation whereby the vessel was released. [29] The state contends particularly that the superior court erred in relying on the general rules of admiralty law in holding that the stipulated bond served as a complete substitute for the res, thereby limiting the state's recovery to that bond, rather than a form of bail in order to allow for the temporary release of the vessel only. We hold that no error was committed by the superior court in this regard. We look first to the language of the stipulation of February 10, 1976, to resolve this question. We must conclude that by itself the stipulation is ambiguous. The document identifies the vessel and gear as part of the res in the forfeiture action, and requires the owners, on an order of a court of competent jurisdiction, to deliver the vessel and gear to the Port of Kodiak. It requires the owners to technically seize crab pots belonging to the vessel and stored in Alaska waters, acting as agents of the state. These provisions indicate an intent by the state to obtain rights to the vessel. However, the document also states that  said release [is] to be final with no right by claimants to return said vessel and relieve themselves of the conditions thereof until a final judgment of this or an appellate court is entered (emphasis added) and includes as a reason for release that the vessel may locally fish, indicating the state's lack of interest in preventing further use of the vessel by its owners. [30] The promissory note for $350,000 executed by the owners as required by the stipulation contains equally ambiguous language, providing [t]he undersigned promises to pay the State of Alaska the sum of any fine for forfeiture assessed the vessel American Eagle by a court of competent jurisdiction ... and in the event that the American Eagle is delivered to a port within the State of Alaska ... [t]his note shall be null and void, but that [t]he amount due under this note shall not exceed $350,000 and [t]his note is executed solely for the purpose of providing security to the State of Alaska for any fine or forfeiture which may be assessed... . [31] The stipulation agreement requires the owners to secure insurance on the vessel in the amount of the appraised value of the vessel and the promissory note requires the proceeds of the insurance to be tendered to the state in case of loss of the vessel. However, the stipulation agreement recites that the vessel and its gear at the time of the stipulation were valued at approximately $350,000. [32] While these provisions are consistent with an intent by the state to retain sufficient security to ensure the return of the vessel itself upon judgment, they also may be interpreted as an understanding between the parties that the bond and insurance provisions would completely satisfy the state's interest in exacting a penalty from the vessel owners if forfeiture was ordered. The state's willingness to release the vessel so that it could continue to be used in local fishing could indicate a lack of resources for storing and maintaining the vessel as well as a decision that the vessel was unlikely to be used in further violations, but these reasons for release can apply equally to the state's concerns either before or after a forfeiture judgment. It was therefore proper for the trial judge to look to relevant case law, absent explicit guidance in the forfeiture statutes, to interpret the stipulation. Federal admiralty cases have uniformly held that stipulation agreements for the value of a vessel generally serve as complete substitutes for the res; once posted, they limit recovery to that amount. See United States v. Ames, 99 U.S. 35, 25 L.Ed. 295 (1878); J.K. Welding v. Gotham Marine Corp., 47 F.2d 332 (S.D.N.Y. 1931). Such stipulations constitute an agreement with the court, involving substitution of a chose in action against the owner in place of the vessel sued in rem. The bond filed becomes the res which alone is sufficient to give the court in rem jurisdiction. J.K. Welding Co. v. Gotham Marine Corp., 47 F.2d 332, 334-35 (S.D.N.Y. 1931). Under the rules of admiralty, once a stipulation for value is posted with the court, the once-seized vessel is free from re-arrest in the same action. See The Shreveport, 42 F.2d 524, 527 (E.D.S.C. 1930). Absent fraud, mistake, or duress, the amount of the stipulation bond will not be raised even though the value of the vessel increases. United States v. Ames, 99 U.S. 35, 25 L.Ed. 295 (1878). The state complains that the above cases deal with commercial liens operating under established admiralty rules. However, the same rules have been applied as well to a government forfeiture proceeding against a vessel for transporting contraband. The Ruth, 20 F.2d 314 (3d Cir.1927). The state also cites admiralty cases in which courts used their discretion to refuse to release vessels on bond absent a stipulated provision for return of the vessels in case forfeiture was upheld. See The Seal, 45 F.2d 243 (S.D.Cal. 1929); United States v. The Memory, 111 F. Supp. 131 (D.Del. 1953). But these cases do not lead to the conclusion that the trial judge here erred in interpreting the ambiguous and conflicting language of the particular stipulation approved in this case as he did. Limiting the owners' forfeiture liability to the amount of the bond, despite a provision in the agreement for the return of the vessel upon order of the court, is consistent with treating the vessel as alternate security for the bond amount to ensure payment of the promissory note. Finally, the state argues that because the trial court's final order of December 1, 1977, decreed forfeiture of the ship and ordered the vessel's return to Kodiak, forfeiture of the vessel itself was the intention of the stipulation. Under admiralty law, however, the court must decree forfeiture against the vessel before final judgment against the substitute bond is entered. The Ruth, 20 F.2d 314 (3d Cir.1927). The superior court's later order requiring substitution of the bond for forfeiture of the vessel is in accord with this rule. The same result is indicated in any event under Alaska case law. Although civil in form, forfeiture actions are basically criminal in nature. Graybill v. State, 545 P.2d 629, 631 (Alaska 1976). As a general rule, forfeitures are disfavored by the law, and thus forfeiture statutes should be strictly construed against the government, One Cocktail Glass v. State, 565 P.2d 1265, 1268-69 (Alaska 1977). The conditions upon which the vessel was voluntarily released by the government are not clear from the stipulation. Furthermore, one of the reasons cited for releasing the vessel, to enable it to return to fishing, is inconsistent with one of the state's justifications for requiring forfeiture of the vessel itself-preventing further illegal fishing. In this context the better interpretation of the agreement is that in favor of the owners of the vessel, against whom this more substantial penalty could be assessed.