This is a proceeding on an order to show cause why moneys seized from a private garage in Jersey City, New Jersey, and belonging to a convicted gambler should not be forfeited to Hudson County as contraband. Pursuant to N.J.S. 2A:152-9 the county seeks to obtain a formal decree or judgment declaring the moneys so seized forfeited to the county as property used in a criminal activity.
Before determining the issues involved in this controversy it is well to review the background of the previous litigation relating to the same subject matter.
HISTORY OF THE PROCEEDINGS
On February 13, 1964 the petitioners*fn1 filed a complaint and affidavit in the Hudson County Court and pursuant to N.J.S. 2A:152-9 obtained an order to show cause returnable March 13, 1964 why $168,400.97 in currency seized on July 6, 1962 from a private garage in Jersey City should not be forfeited to Hudson County as contraband because it was used by Joseph V. Moriarty, a convicted gambler, in his illegal gambling operations.
The complaint and affidavit alleged that: (1) on July 6, 1962 the sum of $168,400.97, as well as numerous articles of gambling paraphernalia, all belonging to Joseph V. Moriarty, were seized and taken from the said garage as a result of a raid conducted by the county prosecutor and members of the Jersey City Police Department; (2) the Hudson County grand jury thereafter indicted Moriarty for violating the State's gambling laws; (3) on June 3, 1963 Moriarty pleaded guilty to a count of that indictment charging him with violating N.J.S. 2A:121-3(b) (possession of lottery slips); (4) more than six months had elapsed from the entry of the plea to the commencement of the proceeding; (5) the subject currency was used by Moriarty in connection with his illegal gambling operation and was the proceeds thereof, and (6) claims had been asserted to all or part of the moneys by the District Director of Internal Revenue, by E. Richard Freeman, owner of the garage at which the raid was conducted; and by Jersey City.
On February 14, 1964 the order to show cause, affidavit and complaint were duly served upon Moriarty by personal service at the State Prison in Trenton. The other claimants were served by certified mail, in accordance with the order to show cause.
Before the return date of the order to show cause the State of New Jersey, by the Attorney General, filed an action against petitioners in the Superior Court, Chancery Division, asserting that the State was entitled to the money as "unclaimed" property. By order dated March 9, 1964 these two actions were consolidated. The order provided that the matter was to be heard in the Superior Court, Law Division.
Before the matter came on for hearing, the District Director filed a petition removing the consolidated actions to the United States District Court for the District of New Jersey. The District Director then filed an answer and a counterclaim in which judgment was sought that the moneys be surrendered to the United States in "response" to a
levy made on May 29, 1963 pursuant to a lien arising on May 10, 1963 against the property of Moriarty for unpaid income taxes and interest. Thereafter, petitioners applied to the federal court for an order remanding the proceedings to the state court on the grounds that the action was improvidently removed in the first place. By order dated April 5, 1967 petitioners' motion was granted and the proceedings were remanded to the Superior Court, Law Division.
At the pretrial conference the court was advised that Jersey City and Freeman, both of whom had based their claims on the contention that the money was "unclaimed," had voluntarily withdrawn from the case. At the hearing the State withdrew its claim that it was entitled to custody of the money under the Custodial Escheat Act, N.J.S. 2A:37-29 et seq., and, alternatively, that it had become the owner of the property under the common law doctrine of bona vacantia. Remaining in the litigation are the petitioners District Director of Internal Revenue and United States of America.
At or before the time for hearing petitioners County Treasurer Stapleton and Hudson County, and claimants District Director of Internal Revenue and United States of America, by their respective counsel stipulated and agreed to many of the facts. In addition thereto, the court received and marked certain exhibits in evidence and heard testimony of several witnesses in open court. Based upon the stipulation, exhibits and testimony adduced at the hearing, the court's findings of fact are as follows:
1. Moriarty has a criminal record dating from the 1930's, pertaining to his violation of the gambling laws of the State of New Jersey. By common repute, he was the kingpin of the "numbers racket" in and around Jersey City.*fn2
2. On July 28, 1960 Moriarty was arrested and subsequently indicted by the Hudson County grand jury for possession of lottery slips (indictment 313-61). On January 16, 1962 he pleaded guilty to that indictment, and bail was continued pending sentencing.
3. On February 20, 1962, while he was free on bail, he was again arrested and charged with possession of lottery slips. His bail was immediately revoked and he was committed to the county jail.
4. On March 2, 1962 he was sentenced to a 2-3-year term in the State Prison, pursuant to his aforesaid plea of guilty to indictment 313-61.
5. Moriarty remained in custody continuously from February 20, 1962 throughout the rest of 1962, and for a considerable time thereafter. He was in the State's custody until March 12, 1964 when he was released to the United States marshal, and was in federal custody until January 6, 1965.
6. On July 3, 1962 several workmen, who were renovating private garages at 127-131 Oxford Avenue, Jersey City, discovered in an old car the sum of $2,438,110 in currency, numerous articles of gambling paraphernalia, as well as letters, papers, etc. belonging to Moriarty. The currency was turned over to the federal authorities.
7. Thereafter, on July 6, 1962 members of the Jersey City Police Department forcibly entered garage No. 56 at 47-61 Oxford Avenue and recovered numerous shopping bags and a cardboard box containing lottery slips, other gambling paraphernalia, and $168,400.96 in currency, all of which was taken into custody as gambling moneys and equipment as shown by the return of a search warrant issued by the assignment judge of Hudson County.
8. Garage No. 56 is in close proximity to the garage in which the $2,438,110 had been found on July 3, 1962, and the law enforcement officials (members of the Jersey City Police Department) discovered the existence of the above-described gambling paraphernalia, including money, in garage No. 56 on July 6, 1962 as a direct result of a general investigation of the area triggered by the July 3, 1962 discovery.
9. On July 12, 1962 Moriarty was indicted by the Hudson County grand jury on a multi-count indictment charging him with violating the State's gambling laws (indictment 999-61).
10. On June 3, 1963 Moriarty pleaded guilty to the 43rd count of that indictment, charging him with violation of N.J.S. 2A:121-3(b) (possession of lottery slips) on divers dates from December 14, 1961 to July 6, 1962, inclusive. The lottery slips confiscated from the garage on July 6, 1962 reflected bets taken by Moriarty on various dates between December 14, 1961 and February 19, 1962, inclusive.
From February 20, 1962 Moriarty was continuously in official custody, and his illegal gambling operation ceased on February 19, 1962.
11. Petitioners commenced the present action more than six months after the entry of the record of conviction pursuant to Moriarty's plea of guilty to the 43rd count of indictment 999-61 on June 3, 1963.
12. On July 5, 1962 the District Director of Internal Revenue made a jeopardy assessment against Moriarty for income taxes and interest due and owing from him in the amount of $3,422,792.66. On July 9, 1962 at 2:10 P.M., the District Director caused to be served on Lawrence A. Whipple, the then Prosecutor of Hudson County, a notice of levy on the property and rights to the property belonging to the taxpayer (Moriarty), pursuant to the aforesaid assessment.
The prosecutor, by letter addressed to the District Director dated September 17, 1962, stated that "The actual funds belonging to above named [Moriarty] were never in my possession."
13. On the evening of July 6, 1962, pursuant to the instructions of the county prosecutor, the aforesaid sum of $168,400.97 was placed in a safe deposit box at the branch office of the Hudson County National Bank located in the City of Bayonne, Hudson County, for safekeeping until Monday, July 9, 1962 when it could be transferred to a deposit account ...