United States v. $277,000 U.S. Currency, and One 1986 Dodge Ram Charger, Jalisco, Mexico, Lic. Hwy 773, and Ramon S. Montes, Claimant-Appellee

This case involves an important issue, one which undoubtedly occurs with some regularity, and yet one that appears to remain a question of first impression, at least so far as a complete examination is concerned. At times, the United States seizes property, especially cash, and is ultimately found to have no proper claim to the property. When the property must be returned to its owner, the question arises as to what extent may the owner recover an amount related to the loss of the use of the property in the interim. We hold that the government is not generally liable for damages or interest prior to judgment, because of sovereign immunity. However, we also hold that to the extent that the government has profited from use of the property, especially where it has (actually or constructively) earned interest on money, it must disgorge those earnings along with the property itself. We therefore reverse and remand for further proceedings consistent with this opinion.

I

The chronology of this case is somewhat tortuous, and is set out in greater detail below. In brief summary, local police seized approximately $277,000 in cash and a truck from Montes on October 13, 1987. This property…