RICO v. PEOPLE (1979)

Penal Code section 1298 provides a procedure by which a defendant in a criminal action may secure his release pending trial by the posting of collateral in lieu of a bail bond or cash to insure appearance. The section states: “In lieu of a deposit of money, the defendant or any other person may deposit bonds of the United States or of the State of California of the face value of the cash deposit required … or the defendant may give as security any equity in real property which he owns․” The statute requires a hearing before a magistrate to determine the value of the “equity” in the posted real property with the requirement that the equity value must equal at least twice the cash deposit that would otherwise be required.

This petition for writ of mandate tests the interpretation and constitutionality of the language of section 1298 which does not specifically provide for the giving of security in the form of an interest in real property by persons other than the defendant to accomplish the defendant's pretrial release. We conclude that in order to preserve the constitutionality of the statute it must be construed as permitting the giving of security in the form of an interest in real property by others on behalf of the defendant equally with the posting of the real property security by the defendant personally. Accordingly, we issue our peremptory writ of mandate directing the respondent court to accept a conveyance of an interest in real property offered to secure the pretrial release of petitioner Rico.

Facts

Alexander Rico is the defendant in a criminal proceeding in which he is charged with involuntary manslaughter. Fred and Jennie Diaz are the stepfather and mother of Rico. Rico was admitted to bail in the amount of $7,500 by a judge of the Long Beach Municipal Court acting as a magistrate. On February 5, 1979, Fred and Jennie Diaz applied to the Long Beach Municipal Court for permission to post an interest in real property in lieu of bail to obtain Rico's pretrial release pursuant to Penal Code section 1298. Purporting to act pursuant to that statute, the magistrate held a hearing to determine the value of the Diaz' equity in the real property to be used by them as security for the release of Rico. The magistrate determined that the value of the Diaz equity in the real property was more than twice $7,500. Documentation in a form satisfactory to the magistrate having been posted by Fred and Jennie Diaz, the magistrate ordered Rico's pretrial release.

Rico appeared for his preliminary hearing on February 16, 1979. Based upon a memorandum of the Los Angeles County Clerk which states that “only real property personally owned by the defendant may be posted in lieu of bail,” the magistrate vacated his order accepting the deposit of an interest in the Diaz property. Rico was remanded to custody. At a hearing on February 21, the magistrate adhered to his prior ruling.

The superior court denied the petition of Rico and Fred and Jennie Diaz for a writ of mandate directing the magistrate to permit the deposit by the Diazes of the security interest in their real property in lieu of cash or a bail bond. The criminal proceeding is now pending in the superior court.

Petitioners filed a petition for writ of mandate with this court seeking an order requiring the superior court to accept the deposit of the real property interest in lieu of bail. Determining that the matter was one of apparent first impression which requires quick resolution, we issued our alternative writ.¹

Penal Code Section 1298

Some sixty years ago, when a predecessor statute to Penal Code section 1298 provided that a defendant might post cash in lieu of a bail bond to secure his pretrial release, our Supreme Court held that cash deposited by another was to be “regarded as the defendant's property.” (Mundell v. Wells (1919) 181 Cal. 398, 402, 184 P. 666.) The language with regard to the deposit of title to real property found its way into section 1298 in 1931. As the statute then read, “the defendant” was authorized to post government bonds or real property in lieu of cash. (Pen.Code § 1298, as amended by Stats. 1931, ch. 1172, § 2, p. 2482.) In 1937, the statute was again amended to read as it does today so far as the law is relevant to the case at bar. It states in part: “In lieu of a deposit of money, the defendant or any other person may deposit bonds of the United States or of the State of California . . or the defendant may give as security any equity in real property which he owns․” (Stats. 1937, ch. 509, § 3, p. 1498.) The 1937 amendment to section 1298 was contemporaneous with one to Penal Code section 1295. The latter changed the statute which had read: “The defendant” may post cash in lieu of bail to read “the defendant, or any other person” may post cash in lieu of bail. (Pen.Code, § 1295, as amended by Stats. 1937, ch. 509, § 1, p. 1498.)

The issue presented by this petition for writ of mandate is thus whether the addition of the words “or any other person” to the cash and government bond form of permissible deposit in lieu of a bail bond requires the construction that the transfer of a security title in real estate complies with the statute only if the transfer is by the defendant personally.

Two interpretations of section 1298 are reasonably possible. The express permission to persons other than the defendant to deposit the alternative forms of bail in the nature of cash or bonds can be said to evidence a legislative intent to reverse the existing case law which held that where there was a deposit by someone other than the defendant the deposit was regarded for bail purposes as the defendant's property. The amended statute can also be construed as merely continuing what the Legislature knew the existing case law to be. Statutory history is marginally in favor of the first meaning. (See 1937 amendment to Pen.Code, § 1301, Stats. 1937, ch. 509, § 5, p. 1499; as well as 1937 amendment to Pen.Code, § 1295, Stats. 1937, ch. 509, § 1, p. 1498.)

Regardless of the relative semantic reasonableness of the two constructions and the pull of statutory history, we are forced to the latter one. Only it satisfies constitutional standards.

The classifications created by the pertinent statutory scheme must be tested against the United States and California guarantees of equal protection of the law. (U.S.Const., 14th Amend.; Cal.Const., art. I, § 7.) We do not reach the issue of whether the strict scrutiny or rational basis tests of unequal treatment applies. Even under the less stringent standards of the rational basis test, the statutory scheme is deficient.

Compliance with the equal protection clause requires “that persons similarly situated with respect to the legitimate purpose of the law receive like treatment” (Purdy & Fitzpatrick v. State of California (1969) 71 Cal.2d 566, 578, 79 Cal.Rptr. 77, 85, 456 P.2d 645, 653), and that, at a minimum, classifications which are created bear a rational relationship to a legitimate public purpose” (In re King (1970) 3 Cal.3d 226, 232, 90 Cal.Rptr. 15, 19, 474 P.2d 983, 987, cert. den., 403 U.S. 931, 91 S.Ct. 2249, 29 L.Ed.2d 709).

We can conceive of no rational basis which justifies a distinction between pretrial release based upon a defendant's posting an equity in his own real property to secure the release as expressly permitted in Penal Code section 1298 and the posting by others of their equity in the same form of property for the same purpose. In either event, there are the same administrative problems incident to dealing with real property rather than cash or government securities. In either event, there are the same problems of foreclosure.

Conceivable Bases of Classification

Classification to prevent “double posting” of property relied upon by trial court. Respondent court found a distinction between posting of security in the form of an equity in real property by the defendant and by others on his behalf in the increased likelihood that the others might post the identical security to obtain the release of several defendants while a defendant, himself, was not likely to be able to do so. That distinction, however, ignores the requirements of Penal Code section 1298 as amplified by respondent court's own directives.

The statutory language permitting “any equity in real property” to be deposited in lieu of cash to obtain a defendant's pretrial release (Pen.Code, § 1298) necessarily contemplates deposit with the court of appropriate documents of title. The real property itself cannot be physically delivered. Appropriate documents of title in turn must be construed to mean those which convey a security interest in the real property in a foreclosable and recordable form so that the deposit may not be defeated by a transfer to a person without notice. Respondent court's directives recognize that fact by the requirement that the deposit of the equity in real property be in the form of a recordable deed of trust.

Once the deed of trust is deposited and recorded, the equity in the real property which represents the security granted by the deed of trust cannot be used again to obtain pretrial release until the deed of trust is reconveyed upon exoneration of the security. The existence of deeds of trust of record on the property deposited is clearly one of the factors to be considered by the magistrate at the magistrate's hearing which Penal Code section 1298 requires to determine if the value of the equity is twice that of the required cash bond. The burden is upon the depositor to show the status of the lien of the deed of trust.

Classification to promote administrative efficiency. The respondent court's return to the petition argues that the classification between real property owned by the defendant posted to secure his pretrial release and that owned by others posted for the same purpose is rationalized by the lesser administrative burden posed by the posting of cash or negotiable government bonds. In essence, the argument is that the latter forms of property involve a significantly lesser call upon court personnel because no hearing with respect to its adequacy is required, the paperwork is less, and realization upon the security is easier because it does not involve the paperwork and difficulty of foreclosure. Hence, continues the contention, a classification which restricts the type of real property posted to that owned by the defendant reduces the number of instances in which the greater administrative burden is imposed.

The argument has some surface appeal. It fails, however, when examined in the context of the statutory scheme. The Legislature has determined that the administrative burden incident to the use of a real property “equity” to secure the obligation of a criminal defendant to appear at trial is an acceptable one. Respondent points to no significant difference in the quantum of the burden where the real property “equity” is that of another person rather than one of record in the name of the defendant. Inhibition on the exercise of a right granted by legislative action which accepts the administrative cost involved is hardly a rational basis upon which the right may be denied unless the inhibition itself is founded upon a rational basis. Denial of the right to pretrial release on bail does not meet the test.

Classification to reduce risk of unlicensed bail bond operations. Respondent contends that allowing persons other than the defendant to post real property as security for the defendant's appearance at trial in order to secure his pretrial release will permit and encourage unlicensed persons to engage in the bail bond business for a fee.

That argument also misses the mark. To the extent that current restrictions upon the bail bond business are not an adequate safeguard against unlicensed persons selling for a fee the use of equity interests in real property to secure the pretrial release of others, those restrictions equally do not prevent the same unlicensed persons from making available for a fee their cash or negotiable government securities. A classification between persons who may violate the law (see, e. g., Ins.Code, §§ 1800, 1800.4, 1800.7, 1800.75) by engaging in an unlicensed business using real property from those who engage in the same illegal conduct using cash or negotiable securities is simply not rational in the context of the statutes here involved.

Implicit in the argument is a related one that the restriction in the form of property that may be posted by others gratuitously to secure a defendant's appearance at trial, and thus his pretrial release, is necessary to protect the business of licensed bail bondsmen who act for a fee. The real property of others who wish to use it as security for the benefit of a defendant charged with a crime is, of course, available in any event to obtain the defendant's pretrial release. Real property may be posted as security with a bail bondsman rather than the court; it secures the bondsman against loss in the event the defendant does not appear (Cal. Criminal Law Practice (Cont.Ed.Bar 1964) § 2.34, p. 76) and thereby reduces the risk for which the bail bond premium, generally 10 percent of the amount of the bond (id.), is paid.

Assuming that protection of the licensed bail bond business protects a significant public interest, nevertheless the classification here involved is not a rational one. In order to protect the business of the middleman, it carves out one class of property unavailable for direct posting with the court without any reason why that class is singled out.

Petitioners' Standing

Respondent court argues that irrespective of the interpretation to be given the governing statute, petitioners lack standing to pursue this petition for prerogative writ because they have failed properly to tender a security interest in real property. That argument ignores the record. The magistrate first accepted the deposit made by documentation tendered by petitioners. He reversed direction solely because by his interpretation an interest in real property is not acceptable to secure a defendant's appearance at trial and hence his pretrial release unless the property is owned by the defendant. Rico was denied pretrial release not because of the manner in which the security interest was posted but because the magistrate applied an erroneous standard. The magistrate's error was perpetuated in the superior court after Rico was bound over for trial.

Disposition

We order the issuance of a peremptory writ of mandate directing the Los Angeles Superior Court: (1) to vacate its prior order refusing to accept the posting by Fred and Jennie Diaz of an instrument of security in real property to secure the appearance of Alexander Rico at trial and thereby to obtain his pretrial release; and (2) to enter a new order permitting Fred and Jennie Diaz to post, if they wish, such an interest in their real property in a form and manner consistent with the Memorandum of the Los Angeles County Clerk dated January 5, 1978, a copy of which is attached as Exhibit B to the petition filed in the Superior Court which is included as an exhibit to the petition at bench, and with Penal Code section 1298 as construed in this opinion.

I dissent. In my opinion the legislative intent of Penal Code section 1298 (hereinafter section 1298) is clear and does not require interpretation nor does it violate the equal protection clause. I would therefore discharge the alternative writ and deny the petition for a peremptory writ of mandate.

LEGISLATIVE HISTORY

In 1919 section 1298 read:

“In lieu of a deposit of money, the defendant may deposit bonds of the United States or of the State of California of the face value of the cash deposit required, and such bonds shall be treated in the same manner as a deposit of money except that the clerk shall, under order of the court, when occasion arises therefor, sell the said bonds and apply the proceeds of such sale in the manner that a deposit of cash may be required to be applied.”

In 1931 section 1298 was amended, in pertinent part, to add to the first sentence the words “or the defendant may give as security any equity in real property which he owns.” Thus, following the 1931 amendment the first sentence read in toto as follows with the addition emphasized:

“In lieu of a deposit of money, the defendant may deposit bonds of the United States or of the State of California of the face value of the cash deposit required, and such bonds shall be treated in the same manner as a deposit of money OR THE DEFENDANT MAY GIVE AS SECURITY ANY EQUITY IN REAL PROPERTY WHICH HE OWNS.”

In 1937 the first sentence of section 1298 was again amended by inserting the four words “or any other person” in the first sentence as follows with that addition emphasized:

“In lieu of a deposit of money, the defendant OR ANY OTHER PERSON may deposit bonds of the United States or of the State of California of the face value of the cash deposit required, and such bonds shall be treated in the same manner as a deposit of money or the defendant may give as security any equity in real property which he owns.”

ISSUES

On appeal petitioners contend (1) that section 1298 can be construed to permit persons other than defendant to tender equity in real property for purposes of bail and (2) that if section 1298 cannot be so construed, it violates the equal protection clause.

DISCUSSION

I

Can Section 1298 Be Construed to Permit Tender of Equity in Real Property by a Person Other Than the Defendant for Purposes of Bail? NO.

“The intent of the Legislature must be ascertained from the language of the enactment and where, as here, the language is clear, there can be no room for interpretation. [Citations.]” (Caminetti v. Pac. Mutual L. Ins. Co. (1943) 22 Cal.2d 344, 353-354, 139 P.2d 908, 913.) Moreover, “[u]nder the customary rules of constitutional interpretation, each word should be given some value.” (Estate of Kent (1936) 6 Cal.2d 154, 162, 57 P.2d 901, 905; see also Sarracino v. Superior Court (1974) 13 Cal.3d 1, 6, 118 Cal.Rptr. 21, 529 P.2d 53.)

Here, it is clear that the Legislature by its amendment of section 1298 in 1931 intended to limit the use of equity in real property given as security to that “which he [defendant] owns.” If the Legislature had intended to permit tender of equity in real property by a person other than the defendant, it could have easily in 1937 when it added the words “or any other person” in respect to the deposit of bonds also inserted the same four words after “which he” and before the word “owns” at the end of the sentence. It is significant that the Legislature did not do so. However, after 40 years the majority opinion has in effect judicially penned in those four words at a second place in the text of the statute in order to preserve the constitutionality of the statute in respect to the equal protection clause. In my view failure of the Legislature to add the four words “or any other person” in that portion of the section pertaining to the equity in real property as distinguished from that portion which pertains to bonds does not justify a rewriting by this court. “A casus omissus does not justify judicial legislation.” (Ebert v. Poston (1925) 266 U.S. 548, 554, 45 S.Ct. 188, 190, 69 L.Ed. 435.)

II

Does the Distinct Treatment of Real Property in Section 1298 Violate the Equal Protection Clause? NO.

“All presumptions and intendments favor the validity of a statute and mere doubt does not afford sufficient reason for a judicial declaration of invalidity. Statutes must be upheld unless their unconstitutionality clearly, positively and unmistakably appears. [Citation.]” (Russell v. Carleson (1973) 36 Cal.App.3d 334, 342, 111 Cal.Rptr. 497, 502.)

“Case law has developed a two-level standard in evaluating legislative classifications under the ‘equal protection’ clause. The traditional test is that there is a presumption of constitutionality which will not be overthrown by the courts unless it is palpably arbitrary and beyond rational and reasonable doubt erroneous and no set of facts reasonably can be conceived that would sustain it. This traditional test is usually applied to ‘economic’ regulations.

The other, and stricter, standard is employed in cases involving ‘suspect classifications' or ‘fundamental interests.’ Here the courts take a close look at the classification and require not only a compelling state interest which justifies the law, but also that the distinctions drawn by the law are necessary to further its purpose. (In re Antazo, 3 Cal.3d 100, 89 Cal.Rptr. 255, 473 P.2d 999; California State Employees' Assn. v. Flournoy, 32 Cal.App.3d 219, 108 Cal.Rptr. 251.)” (Alex v. County of Los Angeles (1973) 35 Cal.App.3d 994, 1000-1001, 111 Cal.Rptr. 285, 289, original italics.)

I conclude that the distinction between treatment of equity in real property for security purposes compared to cash or bonds in the context of the case at bench is “economic” in character where the Legislature has broad authority and that the traditional test is applicable.

In Village of Bell Terre v. Boraas (1974) 416 U.S. 1, 94 S.Ct. 1536, 39 L.Ed.2d 797, the Court said at page 8, 94 S.Ct. at page 1540: “We deal with economic and social legislation where legislatures have historically drawn lines which we respect against the charge of violation of Equal Protection Clause if the law be “‘reasonable, not arbitrary”’ … and bears ‘a rational relationship to a [permissible] state objective’.”

The “economic” character becomes apparent when, in the instant case, the persons other than defendant who sought to post their interest in real property in lieu of bail for defendant could have borrowed on their equity in the real property and used the proceeds to post a cash bail or a bail bond.

In my view the classification between the use of equity in real property owned by the defendant in lieu of the deposit of money or a bond and equity in real property owned by persons other than defendant which is excluded for purposes of deposit is not “palpably arbitrary” nor “beyond rational and reasonable doubt erroneous.” The classification present in the instant case can be reasonably and rationally sustained on the basis (1) that the prime purpose of bail (to insure a defendant's appearance at trial) is promoted when a defendant has a personal stake in the equity of the real property posted and (2) that although the Legislature decided to afford a defendant another means of securing his pretrial release, it was cognizant of the very real and drastic practical effect in terms of judicial administration and economy if persons other than defendant could satisfy this means of posting bail and in its wisdom chose to limit this means of securing a defendant's release to equity in real property owned by defendant.

The potential magnitude of the problem by allowing persons other than the defendant to use equity in real property for bail purposes comes into focus when one realizes that in the fiscal year 1976-77 there were a total of 94,522 felony filings in California municipal courts and 54,682 criminal filings in California superior courts. (See Judicial Council of Cal., Annual Rep. (1978) tables 28, 22, pp. 169, 152.)

Moreover, even if the strict standard is applied, the state interest in maintaining an efficient and economical system of criminal justice is a compelling one and the distinction drawn in section 1298 in respect to equity in real property is necessary to further that purpose.

A legislature need not cover every conceivable equity potentially available for bail. It “may address a problem ‘one step at a time’, or even ‘select one phase of one field and apply a remedy there, neglecting the others.”’ (Jefferson v. Hackney (1972) 406 U.S. 535, 546-547, 92 S.Ct. 1724, 1731, 32 L.Ed.2d 285, 296.)

The California Legislature obviously chose not to permit bail to be deposited in the form of jewels, art works, silver, stocks, gold, equity in automobiles, or the like, all of which could presumably be valued in order not to turn the criminal courts into a giant pawn broker business.

It is reasonable to assume that the state Legislature drafted section 1298 to limit the posting of equity in real property to that owned by a defendant in order not to turn the criminal courts into a giant real estate brokerage operation which would have serious deleterious effects on the efficient and economic administration of California's criminal justice system.

FOOTNOTES

1.  We were informed at oral argument that Rico has now posted a bail bond and been released on bail. Because of the public interest in bail and the proposition that the matter at bar is apparently one of first impression, we decide the matter on the merits. (Ballard v. Anderson (1971) 4 Cal.3d 873, 876-877, 95 Cal.Rptr. 1, 484 P.2d 1345; In re William M. (1970) 3 Cal.3d 16, 23, 89 Cal.Rptr. 33, 473 P.2d 737.)

THOMPSON, Associate Justice.

LILLIE, Acting P. J., concurs. HANSON, Associate Justice, dissenting.