379 U.S. 674 (1965), 13, Texas v. New Jersey

Docket Nº:No. 13, Original
Citation:379 U.S. 674, 85 S.Ct. 626, 13 L.Ed.2d 596
Party Name:Texas v. New Jersey
Case Date:February 01, 1965
Court:United States Supreme Court

Page 674

379 U.S. 674 (1965)

85 S.Ct. 626, 13 L.Ed.2d 596

Texas

v.

New Jersey

No. 13, Original

United States Supreme Court

Feb. 1, 1965

Argued November 9, 1964

ON BILL OF COMPLAINT

Syllabus

Jurisdiction to escheat abandoned intangible personal property lies in the State of the creditor's last known address on the debtor's books and records or, absent such address or an escheat law, in the State of corporate domicile -- but subject to later escheat to the former State if it proves such an address to be within its borders and provides for escheat of such property. Pp. 680-683.

Page 675

BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

Invoking this Court's original jurisdiction under Art. III, § 2, of the Constitution,1 Texas brought this action against New Jersey, Pennsylvania, and the Sun Oil Company for an injunction and declaration of rights to settle a controversy as to which State has jurisdiction to take title to certain abandoned intangible personal property through escheat, a procedure with ancient origins2 whereby a sovereign may acquire title to abandoned property if, after a number of years, no rightful owner appears. The property in question here consists of various small debts totaling $26,461.653 which the Sun Oil Company, for periods of approximately seven to 40 years prior to the bringing of this action, has owed to approximately 1,730 small creditors who have never appeared to collect them. The amounts owed, most of them resulting from failure of creditors to claim or cash checks, are either evidenced on the books of Sun's two Texas offices or are owing to persons whose last known address was in Texas, or both.4

Page 676

Texas says that this intangible property should be treated as situated in Texas, so as to permit that State to escheat it. New Jersey claims the right to escheat the same property because Sun is incorporated in New Jersey. Pennsylvania claims power to escheat part or all of the same property on the ground that Sun's principal business offices were in that State. Sun has disclaimed any interest in the property for itself, and asks only to be protected from the possibility of double liability. Since we held in Western Union Tel. Co. v. Pennsylvania, 368 U.S. 71, that the Due Process Clause of the Fourteenth Amendment prevents more than one State from escheating a given item of property, we granted Texas leave to file this complaint against New Jersey, Pennsylvania and Sun, 371 U.S. 873, and referred the case to the Honorable Walter A. Huxman to sit as Special Master to take evidence

Page 677

and make appropriate reports, 372 U.S. 926.5 Florida was permitted in intervene since it claimed the right to escheat the portion of Sun's escheatable obligations owing to persons whose last known address was in Florida. 373 U.S. 948.6 The Master has filed his report, Texas and New Jersey each have filed exceptions to it, and the case is now ready for our decision. We agree with the Master's recommendation as to the proper disposition of the property.

With respect to tangible property, real or personal, it has always been the unquestioned rule in all jurisdictions that only the State in which the property is located may escheat. But intangible property, such as a debt which a person is entitled to collect, is not physical matter which can be located on a map. The creditor may live in one State, the debtor in another, and matters may be further complicated if, as in the case before us, the debtor is a corporation which has connections with many States and each creditor is a person who may have had connections with several others and whose present address in unknown. Since the States separately are without constitutional power to provide a rule to settle this interstate controversy, and since there is no applicable federal statute, it becomes our responsibility, in the exercise of our original jurisdiction, to adopt a rule which will settle the question of which State will be allowed to escheat this intangible property.

Page 678

Four different possible rules are urged upon us by the respective States which are parties to this case. Texas, relying on numerous recent decisions of state courts dealing with choice [85 S.Ct. 629] of law in private litigation,7 says that the State with the most significant "contacts" with the debt should be allowed exclusive jurisdiction to escheat it, and that, by that test, Texas has the best claim to escheat every item of property involved here. Cf. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306; Atkinson v. Superior Court, 49 Cal.2d 338, 316 P.2d 960, appeals dismissed and cert. denied sub nom. Columbia Broadcasting System, Inc. v. Atkinson, 357 U.S. 569. But the rule that Texas proposes, we believe, would serve only to leave in permanent turmoil a question which should be settled once and for all by a clear rule which will govern all types of intangible obligations like these and to which all States may refer with confidence. The issue before us is not whether a defendant has had sufficient contact with a State to make him or his property rights subject to the jurisdiction of its courts, a jurisdiction which need not be exclusive. Compare McGee v. International Life Ins. Co., 355 U.S. 220; Mullane v. Central Hanover Bank & Trust Co., supra; International Shoe Co. v. Washington, 326 U.S. 310.8 Since this Court has held in Western Union Tel. Co. v. Pennsylvania, supra, that the same property cannot constitutionally be escheated

Page 679

by more than one State, we are faced here with the very different problem of deciding which State's claim to escheat is superior to all others. The "contacts" test, as applied in this field, is not really any workable test at all -- it is simply a phrase suggesting that this Court should examine the circumstances surrounding each particular item of escheatable property on its own peculiar facts, and then try to make a difficult, often quite subjective, decision as to which State's claim to those pennies or dollars seems stronger than another's. Under such a doctrine, any State likely would easily convince itself, and hope to convince this Court, that its claim should be given priority -- as is shown by Texas' argument that it has a superior claim to every single category of assets involved in this case. Some of them Texas says it should be allowed to escheat because the last known addresses of the creditors were in Texas; others it claims in spite of the fact that the last known addresses were not in Texas. The uncertainty of any test which would require us, in effect, either to decide each escheat case on the basis of its particular facts or to devise new rules of law to apply to ever-developing new categories of facts might, in the end, create so much uncertainty and threaten so much expensive litigation that the States might find that they would lose more in litigation expenses than they might gain in escheats.9

New Jersey asks us to hold that the State with power to escheat is the [85 S.Ct. 630] domicile of the debtor -- in this case New Jersey, the State of Sun's incorporation. This plan has

Page 680

the obvious virtues of clarity and ease of application. But it is not the only one which does, and it seems to us that, in deciding a question which should be determined primarily on principles of fairness, it would too greatly exalt a minor factor to permit escheat of obligations incurred all over the country by the State in which the debtor happened to incorporate itself.

In some respects, the claim of Pennsylvania, where Sun's principal offices are located, is more persuasive, since this State is probably foremost in giving the benefits of its economy and laws to the company whose business activities made the intangible property come into existence. On the other hand, these debts owed by Sun are not property to it, but rather a liability, and it would be strange to convert a liability into an asset when the State decides to escheat. Cf. Case of the State Tax on Foreign-Held Bonds, 15 Wall. 300, 320. Moreover, application of the rule Pennsylvania suggests would raise in every case the sometimes difficult question of where a company's "main office," or "principal place of business," or whatever it might...

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