Facts
Parties and instances: The Canton of St. Gallen (Department of Security and Justice, appellant) sued the bankruptcy estate of [A.] , represented by the Bankruptcy Office of Nidwalden (respondent). The prior instances were the Cantonal Court of Nidwalden (first-instance segregation action) and the Higher Court of the Canton of Nidwalden, Civil Division (judgment of 20 September 2018, ZA 18 1).
Criminal proceedings: On 28 June 2005 the Public Prosecutor's Office of St. Gallen seized the condominium [C.] (property No. www, land register [U.] ) together with two mortgage certificates of CHF 100'000.-- each. [A.] was the owner. On 13 December 2007 the District Court of St. Gallen convicted [B.] of property offences and acquitted [A.] ; the property and the mortgage certificates were forfeited pursuant to Art. 70 SCC and designated for realisation. [B.] died on 27 October 2008. Bankruptcy proceedings were opened against [A.] on 11 May 2009. The Cantonal Court of St. Gallen, sitting as appellate instance, discontinued the proceedings against [B.] by judgment of 14 December 2009, upheld the acquittal and the forfeiture including realisation; the judgment became final.
Realisation: On 31 December 2009 the Public Prosecutor's Office requested the Bankruptcy Office of Nidwalden to realise the assets through the competent bankruptcy office; the mortgage certificates were to be cancelled and the proceeds, after deduction of mortgage liens and costs, were to be paid to the Treasury of the Canton of St. Gallen. On 4 May 2011 the Bankruptcy Office realised the property for CHF 915'437.65. After deduction of fees, expenses and mortgage liens (Bank [D.] CHF 229'962.70) and the proceeds of the mortgage certificates (CHF 226'750.-- to the Public Prosecutor's Office), a net proceeds of CHF 418'726.65 remained. The proceeds of the mortgage certificates were transferred to the cantonal treasury on 11 July 2011; the residual proceeds were transferred to the general bankruptcy account on 27 October 2011. On 2 November 2012 the bankruptcy account still held CHF 150'104.07.
Proceedings: On 22 November 2012 the canton demanded segregation of the proceeds of approximately CHF 400'000.--, and on 2 December 2015 again demanded surrender of CHF 418'726.65. On 9 December 2015 the Bankruptcy Office rejected the segregation request (Art. 242 DEBA) and set a 20-day filing period. On 28 December 2015 the canton brought the segregation action (Art. 242 para. 2 DEBA). On 28 April 2017 the Cantonal Court of Nidwalden upheld the action. On appeal by the bankruptcy estate, the Higher Court on 20 September 2018 set aside the judgment and dismissed the action: through the netting of the Rubrik account and the transfer to the bankruptcy account, the monetary amounts had been commingled, so that no amount could any longer be individualised and segregated. Any claims for damages against the Bankruptcy Office were to be asserted in state liability proceedings (Art. 5 DEBA).
Requests before the Federal Supreme Court: The canton (civil law appeal of 13 February 2019) requested the annulment of the Higher Court's judgment and the order that the bankruptcy estate pay CHF 418'726.65, alternatively CHF 150'009.87 or CHF 115'795.52, alternatively remittal. The respondent requested dismissal, alternatively non-entry into the appeal.
Considerations
Admissibility: This is a matter concerning debt enforcement and bankruptcy (Art. 72 para. 2 lit. a FSCA). The civil law appeal is available (Art. 74 para. 1 lit. b, Art. 75 para. 1 FSCA). The unsuccessful canton has standing (Art. 76 para. 1 lit. b FSCA). The violation of federal law may be complained of (Art. 95 lit. a FSCA); the violation of constitutional rights is subject to the strict principle of complaint. The Federal Supreme Court is bound by the facts as established by the prior instance (Art. 105 FSCA).
Legal framework of forfeiture and segregation: Under Art. 44 DEBA, the realisation of criminally seized objects is governed by the relevant federal or cantonal provisions; this also applies to forfeiture under Art. 70 SCC, which takes precedence over the attachment, bankruptcy and arrest seizure (BGE 126 I 97). In the case of forfeiture in kind, the assets are transferred directly into the state's power of disposal by the forfeiture judgment; the DEBA rules are not applicable (BGE 139 III 44, 142 III 174). Substitute claims under Art. 71 SCC, by contrast, are enforced through the DEBA. Segregation under Art. 242 DEBA concerns only the question whether an object is subject to the bankruptcy seizure; it functionally corresponds to the objection procedure (Art. 106 ff. DEBA).
Effect of the forfeiture judgment: The final criminal judgment of 14 December 2009 had already removed the property and the mortgage certificates from the bankruptcy estate before realisation. The state, as the forfeiture beneficiary, is not a third-party claimant within the meaning of Art. 107 para. 5 DEBA and therefore cannot proceed by way of an objection or segregation action (BlSchK 1972 p. 20). Art. 44 DEBA limits the scope of the segregation procedure: it does not apply to assets that do not belong to the bankruptcy estate under Art. 197 ff. DEBA.
Surrogate argument rejected: The canton relied on BGE 122 III 436, under which the consideration for third-party property sold by the bankruptcy administration falls into the estate and may be segregated. That case does not apply here: the Bankruptcy Office did not sell foreign property subject to the bankruptcy seizure, but assets that had already been placed outside the bankruptcy estate by the…