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Opinion 98004

DATE: January 15, 1998

SUBJECT: Disposing of Unclaimed Motor Vehicles and Recovering the Costs Associated with the Nebraska State Patrol's Seizure and Storage of Motor Vehicles.

REQUESTED BY: Ron Tussing, Colonel Superintendent Nebraska State Patrol

WRITTEN BY: Don Stenberg, Attorney General

Paul N. Potadle, Assistant Attorney General




QUESTION 1: Is a motor vehicle "property" as contemplated by

Neb. Rev. Stat. § 29-820(c) (1995) that it may be

disposed of pursuant to that section?




ANSWER 1: The term property as used in sections 29-812 to 29-

821 is defined as "tangible objects" which includes

motor vehicles.




QUESTION 2: For the provisions of Neb. Rev. Stat. § 29-820

(1995) to apply to a motor vehicle, must the

seizure have been motivated solely by specific

evidentiary purposes or is it sufficient that the

motor vehicle was seized and is not required as

evidence?




ANSWER 2: Under Neb. Rev. Stat. § 29-818 (1995), an officer

may seize property and hold it in custody "so long

as is necessary for the purpose of being produced

as evidence on any trial."




QUESTION 3: Does the "net proceeds" language of Neb. Rev. Stat.

§ 29-820(c) (1995) and Article VII, Section 7,

Constitution of Nebraska, authorize the use of

proceeds to pay costs of seizure, storage and sale

of the vehicle with the balance to be paid to the

school perpetual fund?




ANSWER 3: When used in other statutes, the Nebraska Supreme

Court has defined the term "net proceeds" as gross

proceeds minus reasonable and necessary expenses

incurred. The costs of seizure, storage and sale

of the vehicle are likely to be considered

reasonable expenses.




QUESTION 4: Is an affidavit establishing a motor vehicle as

property described in Neb. Rev. Stat. § 29-820(c)

(1995) "evidence sufficient" to permit the

Department of Motor Vehicles to issue or to

authorize a title to such motor vehicles pursuant

to Neb. Rev. Stat. § 60-111 (1993)?




ANSWER 4: Under Neb. Rev. Stat. § 60-111 (1993), an applicant

for a new certificate of title must set forth facts

entitling him or her to possession and ownership;

not evidence that the vehicle is property.






DISCUSSION




A motor vehicle is considered property under section 29-

820(c). According to section 29-817, "[t]he term `property' [as]

used in sections 29-812 to 29-821 [includes] documents, books,

papers, and any other tangible objects." Motor vehicles are

clearly tangible objects. Further, in Nash v. City of North

Platte, 205 Neb. 480, 288 N.W.2d 51 (1980), the Nebraska Supreme

Court addressed the issue of tort liability under section 29-818

for damages sustained to a seized vehicle while in an officer's

custody. Although the Court never dealt with the issue directly,

a motor vehicle was treated as "property" for the purposes of

sections 29-818 to 29-821.




The disposition of property under section 29-820 appears to

apply only to property seized for the purpose of being used as

evidence. Section 29-820 itself is premised, ". . . when property

seized is no longer required as evidence, it shall be disposed of.

. . ." Additionally, other sections in this act contain the same

implicit assumption. For example, section 29-818 provides that

seized property can only be held in custody "so long as necessary

for the purpose of being produced as evidence on any trial."

Similarly, the following section, 29-819, provides that, "[w]here

property is no longer required as evidence . . ." it may be

transferred to another jurisdiction. Thus, to the extent that

seized property under this section can be disposed of only when it

is no longer required as evidence, the initial motivation for

seizure must have been for evidentiary purposes. Further, the

disposition of property seized for non-evidentiary reasons, such as

abandoned property, is dealt with in a different manner under Neb.

Rev. Stat. § 60-1905 (1993). Thus, section 29-820 appears to refer

only to the disposition of property initially seized as evidence.




There is no Nebraska caselaw that defines the term "net

proceeds" for the purposes of Article VII, section 7 of the

Nebraska State Constitution. However, Black's Law Dictionary

defines net proceeds as "[g]ross proceeds, less charges which may

be rightly deducted." (6th ed. 1990). This definition is

consistent with caselaw dealing with net proceeds in various

contexts, see, e.g., Parker v. Parker, 1 Neb. App. 187, 492 N.W.2d

50 (1992) ("auction dealt with net proceeds after expenses of

$42,541.06.") and McGowan v. Nebraska State Bank, 229 Neb. 471, 427

N.W.2d 772 (1988) (". . . for a total sales price of $28,956.01,

with net proceeds of $27,872.29 after expenses"). In an

unpublished opinion, the Nebraska Court of Appeals defined net

proceeds as "gross proceeds minus the cost of sale." Peterson v.

Peterson, (1995 WL 454723). In State v. City Betterment Corp., 197

Neb. 575, 250 N.W.2d 601 (1977), the Nebraska Supreme Court stated

that,




The term "proceeds" has been used in all kinds of

contexts and in various situations has been interpreted

as net or gross, depending upon the circumstances. The

words and terms of a constitutional provision are to be

interpreted and understood in their most natural and

obvious meaning. . . The word "proceeds" in Article III,

section 24, Constitution of Nebraska, and in section 28-

964.03, R.R.S. 1943, means "net proceeds." Reasonable

and necessary expenses incident to the organization and

operation of a lottery may be paid from lottery proceeds.




Id. at 582-583. Thus, "net proceeds" when construed in its

ordinary meaning, refers to gross proceeds of a sale less any

reasonable and necessary expenses.




The relevant caselaw fails to indicate what constitutes

"reasonable and necessary expenses." However, Neb. Rev. Stat. §60-

111 (1993) refers to the sale of a vehicle to satisfy storage or

repair charges, and section 60-2019 provides for the proceeds from

the sale of an abandoned vehicle "less any expenses incurred by the

local authority. . . ." Thus, it appears that the net proceeds

language of Article VII, section 7 refers to the proceeds of the

sale of seized property, minus the reasonable and necessary costs

of the initial seizure, storage and eventual sale of the property.




Section 60-111 provides, in relevant part, that,




Only an affidavit by the person or agent of the person to

whom possession of such motor vehicle has so passed,

setting forth facts entitling him or her to such

possession and ownership, together with a copy of the

journal entry, court order, or instrument upon which such

claim of possession and ownership is founded shall be

considered satisfactory proof of ownership and right of

possession, except if the applicant cannot produce such

proof of ownership, he or she may submit to the

department such evidence as he or she may have, and the

department may thereupon, if it finds the evidence

sufficient, issue the certificate of title or authorize

the county clerk to issue a certificate of title as the

case may be.




Neb. Rev. Stat. § 60-111 (1995). Thus, a new certificate of title

will be issued if the applicant submits an affidavit setting forth

facts entitling the applicant to possession, such as a failure of

the true owner to claim the vehicle. With the affidavit, the

applicant must also include a copy of the court order, journal

entry or other instrument upon which ownership is based. If the

applicant does not have a court order or journal entry, the

applicant can submit whatever evidence he or she does have. It is

then left to the discretion of the Department of Motor Vehicles to

decide whether the evidence submitted is sufficient to issue a new

certificate.




There is no Nebraska caselaw on what constitutes sufficient

evidence of ownership when a certificate of title cannot be

produced. However, if an owner of the vehicle is unknown, it seems

logical that the applicant would have to set forth facts indicating

that he or she made a reasonable effort to find the owner of the

vehicle. If the owner is known but fails to claim the vehicle, an

affidavit should set forth facts indicating that the Patrol made

reasonable efforts to notify the owner over a period of time and

that the owner refused to claim the vehicle.




CONCLUSION




A motor vehicle is considered "property" for the purposes of

Neb. Rev. Stat. § 29-820(c) (1995). For the provisions of Neb.

Rev. Stat. § 29-820 to apply to a motor vehicle, the initial

seizure must have been motivated by evidentiary purposes. The "net

proceeds" language of Neb. Rev. Stat. § 29-820(c) and Article VII,

Section 7, Constitution of Nebraska, likely authorizes the use of

proceeds to pay costs of seizure, storage and sale of the vehicle

with the balance to be paid to the school perpetual fund. An

affidavit setting forth facts entitling the State Patrol to

possession of a motor vehicle, together with a copy of the journal

entry, court order or other instrument upon which ownership is

based should be considered sufficient evidence to permit the

issuance of a new certificate of title by the Department of Motor

Vehicles or the County Clerk to issue a new title under Neb. Rev.

Stat. § 60-111 (1993).




Sincerely,




DON STENBERG

Attorney General




Paul N. Potadle

Assistant Attorney General