407 U.S. 206 (1972), 40, Pennsylvania v. New York

Docket Nº:No. 40, Orig.
Citation:407 U.S. 206, 92 S.Ct. 2075, 32 L.Ed.2d 693
Party Name:Pennsylvania v. New York
Case Date:June 19, 1972
Court:United States Supreme Court

Page 206

407 U.S. 206 (1972)

92 S.Ct. 2075, 32 L.Ed.2d 693



New York

No. 40, Orig.

United States Supreme Court

June 19, 1972

Argued March 29, 1972



Pennsylvania brought this original action against New York to determine [92 S.Ct. 2076] the authority of States to escheat, or take custody of, unclaimed funds paid to Western Union Telegraph Co. for purchase of money orders. The Special Master, following Texas v. New Jersey, 379 U.S. 674, recommended that any sum held bye Western Union unclaimed for the time period prescribed by state statute may be escheated or taken into custody by the State in which the company's records placed the creditor's address, whether the creditor be the payee of an unpaid draft, the sender of a money order entitled to a refund, or an individual whose claim has been erroneously underpaid; and where the records show no address, or where the State in which the creditor's address falls has no applicable escheat law, the right to escheat or take custody shall be in the debtor's domiciliary State, here New York. The recommended decree is adopted and entered, and the cause is remanded to the Special Master for a proposed supplemental decree with respect to the distribution of the costs to the States of the inquiry as to available addresses. Pp. 208-216.

BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and DOUGLAS, STEWART, WHITE, and MARSHALL, JJ., joined. POWELL, J., filed a dissenting opinion, in which BLACKMUN and REHNQUIST, JJ., joined, post, p. 216.

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BRENNAN, J., lead opinion

MR. JUSTICE BRENNAN delivered the opinion of the Court.

Pennsylvania and other States except to, and New York supports,1 the Report of the Special Master filed in this original action brought by Pennsylvania against New York for a determination respecting the authority of the several States to escheat, or take custody of, unclaimed funds paid to the Western Union Telegraph Company for the purchase of money orders.2 We overrule

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the exceptions and enter the decree recommended by the Special Master, see post, p. 223.3

The nature of Western Union's money order business, and the source of the funds here in dispute, were described by the Court in Western Union Telegraph Co. v. Pennsylvania, 368 U.S. 71 (1961):

Western Union is a corporation chartered under New York law with its principal place of business in that State. It also does business and has offices in all the other States except Alaska and Hawaii, [as well as] in the District of Columbia and in foreign countries, and was, from 1916 to 1934, subject to regulation by the I.C.C., and since then by the F.C.C. In addition to sending telegraphic messages throughout its world-wide system, it carries on a telegraphic money order business which commonly works like this. A sender goes to a Western Union office, fills out an application and gives it to the company clerk who waits on him, together with the money to be sent and the charges for sending [92 S.Ct. 2077] it. A receipt is given the sender, and a telegraph message is transmitted to the company's office nearest to the payee directing that office to pay the money order to the payee. The payee is then notified, and, upon properly identifying himself, is given a negotiable draft which he can either endorse and cash at once or keep for use in the future. If the payee cannot be located for delivery of the notice, or fails to call for the draft within 72 hours, the office of destination notifies the sending office. This office then notifies the original sender of the failure to deliver and makes a refund, as it

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makes payments to payees, by way of a negotiable draft which may be either cashed immediately or kept for use in the future.

In the thousands of money order transactions carried on by the company, it sometimes happens that it can neither make payment to the payee nor make a refund to the sender. Similarly, payees and senders who accept drafts as payment or refund sometimes fail to cash them. For this reason, large sums of money due from Western Union for undelivered money orders and unpaid drafts accumulate over the years in the company's offices and bank accounts throughout the country.

Id. at 72-73.

In 1953, Pennsylvania began state proceedings under its escheat statute4 to take custody of those unclaimed funds, held by Western Union, that arose from money order purchases in the company's Pennsylvania offices. The Supreme Court of Pennsylvania affirmed a judgment for the State of about $40,000, Commonwealth v. Western Union, 400 Pa. 337, 162 A.2d 617 (1960), but this Court reversed, Western Union Telegraph Co. v. Pennsylvania, supra, holding that the state court judgment denied Western Union due process of law because it could not protect the company against rival claims of other States. We noted that controversies among different

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States over their right to escheat intangibles could be settled only in a forum

where all the States that want to do so can present their claims for consideration and final, authoritative determination. Our Court has jurisdiction to do that.

Id. at 79.

Thereafter, in Texas v. New Jersey, 379 U.S. 674 (1965), the Court was asked to decide which of several States was entitled to escheat intangible property consisting of debts owed by the Sun Oil Co. and left unclaimed by creditors. Four different rules were proposed. Texas argued that the funds should go to the State having the most significant "contacts" with the debt, as measured by a number of factors; New Jersey, that they should go to the State of the debtor company's incorporation; Pennsylvania, to the State where the company had its principal place of business; and Florida, to the State of the creditor's last known address as shown by the debtor's books and records. We rejected Texas' and Pennsylvania's proposals as being too uncertain and difficult to administer, and rejected New Jersey's because

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.

Id. at 680. Florida's proposal, on the other hand, was [92 S.Ct. 2078] regarded not only as a "simple and easy" standard to follow, but also as one that tended "to distribute escheats among the States in the proportion of the commercial activities of their residents." Id. at 681. We therefore held that the State of the creditor's last known address is entitled to escheat the property owed him, adding that, if his address does not appear on the debtor's books or is in a State that does not provide for escheat of intangibles, then the State of the debtor's incorporation may take custody of the funds "until some other

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State comes forward with proof that it has a superior right to escheat." Id. at 682. The opinion concluded:

We realize that this case could have been resolved otherwise, for the issue here is not controlled by statutory or constitutional provisions or by past decisions, nor is it entirely one of logic. It is fundamentally a question of ease of administration and of equity. We believe that the rule we adopt is the fairest, is easy to apply, and, in the long run, will be the most generally acceptable to all the States.

Id. at 683.

On March 13, 1970, Pennsylvania filed this original action to renew its efforts to escheat part of Western...

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